Podcast: Rising US yields rip through gold and silver in chaotic move
The US 10-year yield was only up 6.6 basis points yesterday but the move was enough to set in motion a selling pressure so large that liquidity dried up causing a dramatic downside move across both gold and silver. Long duration assets such as technology stocks were also hit but not to the same degree and equities are generally bid this morning. We also talk US politics on back of yesterday's announcement from Biden that Kamala Harris is the vice president nominee.
Q2 earnings were worse than expected but investors are pricing a ‘new world’
Earnings were bad in Q2 and worse than expected six weeks ago although the provided outlooks have improved and bolstered forward earnings expectations. It is clear from dividend futures that the market expect companies to rebound in terms of earnings but lower the payout ratio to either repay debt or invest in growth. Either way, our view is that investors have overlooked bad macro and earnings as they are pricing in a 'new world' of lower yields for longer but still high growth in certain areas of the economy which will drive bond proxy pricing in equities and accelerate equity concentration.