Japan’s 2-year government bond yield rose to 1.975% at one point, and the implied probability of a Fed rate hike in October remains near high levels.
This amounts to moving two key global interest-rate anchors upward at the same time—raising the floor for the “risk-free rate,” which requires a reassessment of the valuation of all assets.
Spot gold briefly fell below $4,200 per ounce. With typical expectations of tightening heating up, precious metals were under pressure; conversely, tech stocks have gained about 14% since the end of July, while the rest of the S&P 500 is down about 3%. Overall, stock funds saw roughly $10.2 billion in net outflows over the past week.
Deutsche Bank’s view is that tech-stock positioning is currently around the 80th percentile in history, below the peak at the 99th percentile in early June—so, in theory, there is room for rotation. But whether the Bank of Japan will truly keep hiking consecutively, and whether the Fed will step in again, remain the key uncertainties in this repricing of interest rates.
This amounts to moving two key global interest-rate anchors upward at the same time—raising the floor for the “risk-free rate,” which requires a reassessment of the valuation of all assets.
Spot gold briefly fell below $4,200 per ounce. With typical expectations of tightening heating up, precious metals were under pressure; conversely, tech stocks have gained about 14% since the end of July, while the rest of the S&P 500 is down about 3%. Overall, stock funds saw roughly $10.2 billion in net outflows over the past week.
Deutsche Bank’s view is that tech-stock positioning is currently around the 80th percentile in history, below the peak at the 99th percentile in early June—so, in theory, there is room for rotation. But whether the Bank of Japan will truly keep hiking consecutively, and whether the Fed will step in again, remain the key uncertainties in this repricing of interest rates.
