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The highlight in international markets over the last few weeks has been the sharp rise in interest rates in the United States and the reflection of this movement in several asset classes. Stock markets and the most risky assets have suffered recently due to the rapid increase in future interest rates in the country. This move was not at all unexpected. The US Federal Reserve has long said that interest rates are likely to remain high for a few quarters. The increase cycle may be close to an end, but the beginning of an interest rate reduction cycle is certainly not even close to beginning. The market had a different reading for short-term rates. Until a few weeks ago, investors thought that the US Central Bank would start cutting interest rates at the beginning of next year. Now, they seem to be just getting real and listening to what the FED has been saying for a long time.
Nothing strange here. What perhaps scared the market a little was the increase in long-term interest rates , which has little to do with the increase or reduction decisions made by the Central Bank. Long interest rates tend to fluctuate according to other issues, such as the country's Brother cell phone list fiscal outlook (how much the government spends above what it collects), investors' perception of risk regarding the issuer, structural changes in the inflation dynamics of long term, among others. The United States, despite being the largest economy in the world, is going through a different moment in history when it comes to government spending. This seems to be one of the most worrying points in the long term. Fixed income fluctuating more than stock markets It seems kind of impossible.
But it's true! The chart below shows how much a portfolio of long-term (10+ years) government bonds has retreated from the recent peak price. The investor who purchased this basket of long US government bonds in March 2020 has already seen his investment lose something close to -45% , marking one of the biggest drawdowns in the history of fixed income in the country. Performance of long US government bonds Source: Bloomberg Financial Freedom Worksheet The story behind the rise in interest rates First, interest rates rose due to inflation , which was rising rapidly and thus led the US Central Bank to carry out one of the largest and fastest cycles of interest rate increases since 1980. Inflation was being tamed, but other factors, such as the heated job market , rising wages, excess spending by consumers, among others.
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发表于 2023-10-8 19:05:02
