Kieger Multi Asset Chart of the Month – Kieger
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Kieger Multi Asset Chart of the Month

Kieger Multi Asset Chart of the Month

Halloween Scare?

Globally, government bond yield curves have flattened as central banks started signalling the end of the era of ultra-loose monetary policy. But the flattening of yield curves accelerated last week after the UK reduced bond-issuance plans and the Bank of Canada accelerated the time of potential future rate increases.

The flattening was so striking that the longer end of the US Treasury market, the 20- to 30-year segment, became the first to invert.
Curve inversion is not a good omen; it almost always portends some form of sell-off/recession by roughly 18 months. In addition, the end of easy money may have other impacts on jittery investors.

The chart shows the 10- to 30-year US Treasury spread – a proxy for uncertainty in the medium term – and the MOVE Index which measures short dated volatility, i.e. the price of risk.

These were closely related until central banks stepped in post credit crisis; with the Fed stepping back, we may see further normalisation either by deeper curve flattening or an increase in forward looking risk. It could be a bumpy ride.

Related News

Multi Asset
2. December 2021

Kieger Multi Asset Chart of the Month

After the COVID-induced selloff in March 2020, the US equity market has climbed strongly and steadily to new highs. For the whole of 2021, this has been earnings-driven, rather than multiple expansion.

Multi Asset
8. October 2021

Kieger Multi Asset Chart of the Month

Certainly not Chairperson Powell’s “knockout, great, super strong employment report” but Still Enough for Fed to Taper. September job growth in the US was underwhelming vs. expectations but still a green light for a Fed taper announcement by year-end.

Multi Asset
3. June 2020

Asset Allocation

Going back more than 20 years, Kieger’s legacy has been built in healthcare and small companies. Over these decades we have developed our own “unique” asset allocation which has some outstanding and attractive portfolio characteristics, especially in recent turbulent times.

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