11th November 2016
Weekly Market Commentary
A lot of attention has been given to the sell-off in government debt markets, although as ever the reality has failed to match up to the hype.
UK 10 year Gilts are still below their pre-Brexit levels, having been 2% last November. Meanwhile, US 10 year Treasuries are at 2.3% at the time of writing, back to where they were in the same month. While this does mean investors have lost money in these instruments, for us the real story has been the far more reassuring fact that equity markets have been rising at the same time.
The most alarming hypothesis about bonds we have heard over the past few years is the one predicting that yields would rise as equities sold off in some sort of systemic loss of confidence. Well that has not occurred, and investors who were diversified have done well again, with gains in the stock markets offsetting losses in bonds. It is wise to be aware of and prepared for the scenarios in which bonds and stocks could sell off at the same time, but once again following conventional wisdom would have served investors poorly.
For information on the Markets this week, follow this link to read our full Market Commentary.