Real yields and gold

The recent drop in the price of gold below $1,700/oz. has illustrated its greater sensitivity to US long- than short-dated real yields. Although the price has nudged back up above this level at the time of writing, we expect it to fall back to an even lower level as the US real yield curve steepens more. In view of wider interest, we are also sending this publication to clients subscribed to our Metals Service.
John Higgins Chief Markets Economist
Continue reading

More from Asset Allocation

Asset Allocation Chart Book

Omicron uncertainty provides a sense of déjà vu

News of the spread of the Omicron variant has put COVID-19 back at the top of many investors’ list of concerns. While on a far smaller scale, the impact on markets so far has been qualitatively similar to that during the first COVID-19 meltdown between mid-February and late March of 2020. US Treasury yields have fallen, stock markets have stumbled – with US equities holding up better than those elsewhere – and energy commodities have seen big losses.

30 November 2021

Asset Allocation Focus

The case for US banks’ equities to outperform

We forecast that banks’ equities will outperform the rest of the US stock market over the next couple of years, for three main reasons.

24 November 2021

Asset Allocation Update

Taking stock of potential corporate tax reforms

This Update answers several questions on the Biden administration’s latest proposals for US corporate taxes as well as the global tax deal recently agreed among the world’s major economies. The proposed changes are probably, at the margin, a reason to think that US equities will underperform. Within the US market, we suspect the earnings of technology and pharmaceuticals companies would see the largest hit.

19 November 2021

More from John Higgins

Asset Allocation Update

What’s behind renewed US equity outperformance?

It has become harder to make the case that the stock market in the US will fare worse than those in the rest of the developed world, now that the “rotation” trade has fizzled out. Nonetheless, we still think there are other reasons to expect the relentless outperformance of US equities to end.

7 July 2021

Asset Allocation Update

Would US equities beat Treasuries if inflation surged?

The received wisdom is that inflation is worse for government bonds than for equities. Yet the S&P 500 has fared worse than 10-year Treasuries in a couple of periods of high inflation in the US since the 1960s.

1 July 2021

Capital Daily

Consumer confidence and the US stock market

We do not think that the surge in the Conference Board’s index of consumer confidence in June is a reason to be positive about the outlook for the US stock market.

30 June 2021
↑ Back to top