SocGen

US Treasury Risk Spikes To 3 Year High Versus Stocks

"Riskless" US Treasury bonds are at their riskiest relative to "risky" stocks since the summer of 2013's Taper Tantrum... and at the same time, bonds are 'cheapest' to stocks in over a year...

"Brace For Economic Disruption" SocGen Sees "Sharp Rise In Gold" As India Plans Cap On Cash Holdings

India's 'de-monetization' scheme has caused chaos across the nation, and while SocGen says the government's plan may have some short-term success in curbing so-called 'black-money', investors should "brace for economic disruption" as Bloomberg reports the Indian government is considering a cap on cash holdings for individuals. As SocGen concludes, "people will now be more inclined to park their black income in gold rather than in currency."

What "The Worst Bond Rout In 15 Years" Means For Stocks

"The paradigm has shifted in terms of inflation. Long-end interest rates are dangerous. Make sure you are being really careful about the long-end exposure as we saw this week." - Rick Rieder, CIO for global fixed income at BlackRock.

Regime Change? Yields Surpass Critical Level

For now, shareholders appear unphased by the fact that the cost of funding of the companies that they prize are soaring at an unprecedented speed. Nowhere is that more obviously disconnected than the congnitive dissonance between credit-sensitive small cap stocks and the plunge in high-yield corporate bonds. However, as we have begun to see today, rising yields are starting to weigh on stocks... but at what level does that "too much of a bad thing in bonds" slam stocks?

Frontrunning: November 14

  • Trump shapes White House, hires establishment figure, firebrand (Reuters)
  • The Trump Effect: Rout in Global Bonds and Emerging Markets Intensifies (BBG); Government Bond Rout Deepens (WSJ); Dollar soars as U.S. yields spike; global shares divided (Reuters)
  • Oil pinned near three-month lows as gloom grows over OPEC (Reuters)
  • Thin Rank of Donors May Contend for Top Posts (WSJ)
  • Trump’s Election Upends Agenda for Obama’s Last Foreign Trip (BBG)

Markets In Turmoil: Global Bond Bloodbath, Currency Rout Accelerates As Stocks Erase Early Gains

Monday started off where Friday left off, with the dollar surge continuing, pushing the DXY above 100 for the first time since December, global bond yields soaring, emerging market currencies tumbling, and the Yuan slammed below 6.85 for the first time. However, where Monday is different is that while European stocks and US index futures started off far higher, E-minis have now faded the entire overnight rally and are now red for the session, on concerns that the spike in yields will cap any more stock upside.

Trump Victory Leads To Unprecedented Fund Flows; Trillions In Gains, Losses

The sharp rise in yields following the Trump victory inflicted a big loss in the value of the global bond universe with the dollar value of the universe of tradable bonds globally losing $1.2 trillion over the past week, while at the same, the value of global equities increased by $0.8 trillion; however the real fireworks were behind the scenes, where the fund in- and outflows within equity groups were truly unprecedented.

SocGen Presents The "Toxic" Difference Between QE In The US And Japan

In the US, easy central bank policy leads to greater corporate bond issuance and leverage, which in turn result in companies buying back their own equity - and to that extent QE is now residing on individual company balance sheets. In contrast, in Japan the BOJ simply buys Japanese equities directly. This difference is important

SocGen Explains The Recent Surge In Health Care Costs

In addition to higher reimbursements, consumers are paying more out of their own pockets. A shift to high-deductible health insurance plans in recent years means that consumers are contributing more to the cost of health care. In August, medical care services prices in the South surged by 1.2% NSA, the biggest increase in any August since at least 1990.