Portfolio Watch: Bears & Hawks
Hello everybody and welcome back to our weekly Portfolio watch!
A tumultuous week comes to an end and our Portfolio is now more a mixed bag than a sea of green. Global stocks have had their worst week since March and it seems we may be on the doorstep of some more risk-off momentum (see our promising analyst, Elias’ latest write-up right here on equity momentum). Meanwhile, BoE and Norges Bank surprised markets with hikes but could those hikes be the last grasps of a dying hawk? PMI prints from Europe coming out today could hint in that direction.
The downturn in European PMI numbers will also likely knock out some of the bond bears, which greatly increases the risk/reward of being long bonds (both the long and short end of the curve). Even though selling pressures are increasing in the short term due to a more hawkish tone from central banks and the replenishment of the TGA, the slowdown in bigger economies (which today’s PMIs show) will end up outweighing such selling pressures.
We are therefore also strongly considering adding more to our TLT position, as we have put our parades up in response to the current hawkish central bank rhetoric and waning future growth.
Chart 1: PMIs are weakening across the board (TLT)