State of play
The movement in the 10 year is reflective of a world in which COVID is increasingly on the backfoot, with doubled vaxxed rates steadily marching toward 80% and beyond.
We’ve also had another months worth of respite from the debt ceiling furphy, which isn’t resolved, but to the market’s mind a problem delayed is a problem solved.
There’s also some mild evidence that freight and shipping rates are peaking, which, when combined with the recent stabilisation in natural gas prices, does give risky assets a not unreasonable set up.
We are underweight on a DAA basis, due to valuation, but it is always worth pointing to the positives that help underpin an allocation inline with one’s SAA (as opposed to the all-to-common “there’s some negatives out there, so I’m going to cash”, at which point the investor only returns when seas are calm and markets have already repriced).
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