Key highlights from this interesting read:
Bank stocks have remained under pressure since the past two weeks. The 2 year Treasury yield slid further to price in the rate hike.
Blackrock still favors inflation linked bonds as they do not foresee any rate cuts this year.
They do not expect the inflation figure to be falling to the expected target level of 2% till 2025.
Banking troubles did not stop the Fed and the ECB from further tightening. However the contagion seems to have been settled for now in the US by protecting depositors from bank failures.
Central banks are causing a recession to tackle the sticky inflation. This comes in against the old playbook where the central banks stepped in as soon as the recession arrived.
Blackrock is underweight long term government bonds due to the volatility and the increased yield as investors would be demanding additional compensation for the risk asset.
Gold has been one of the best performing asset classes this year till date.
Rate cuts are not the way to support risk assets.
Higher mortgage rates are hurting new home sales around the world.
"Buying the dip" does not work from the old playbook in this high volatility environment. - Interesting highlight as buying the dip has been one of the best performing strategies in this year till date.
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