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The Market Ear with the latest on positioning.
Not a rosy picture
The 10YY has now been elevated to current levels for the longest period of time since before the GFC. In addition, the move upward was pretty violent and there is rising fears that the recent spike back up toward highs has further upside. Jefferies took a look at similar instances of big upward swings in the 10YY and subsequent SPX performance. What they found doesn’t paint a rosy picture. On average, 1-3M performance is flat to negative, but when you take out the ‘big’ swings during ZIRP, it gets even worse. Average 3mo SPX performance is -2% and average 12mo performance is just 4%.
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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
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