Global Yields Nearing A Breaking Point | Weekly Roundup

29 snips

Jan 10, 2025

This week delves into the encroaching growth scare and how the dollar is triggering a global margin call. Discussions spotlight global yields nearing a breaking point and the housing affordability crisis plaguing many. The challenges of public spending and strong job reports provide a backdrop to navigating current economic uncertainties. Impact on the housing market from rising yields is examined, raising concerns over homeownership amidst skyrocketing mortgage rates.

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INSIGHT

Global Margin Call

The current market dynamic is a global margin call on U.S. dollar-denominated debt.
This is driven by a rising dollar, forcing other countries to pay back debt in more expensive dollars.

INSIGHT

Sovereign vs. Corporate Debt

Despite global geopolitical and FX issues, U.S. high-yield bonds remain stable, suggesting the issue is sovereign, not corporate.
This is indicated by stable credit default swap spreads on high-yield corporate debt.

ADVICE

Watch Credit Spreads

Watch credit spreads closely, particularly high-yield corporate debt.
A spike in these spreads would suggest sovereign problems are affecting corporations, signaling a potential market shift.

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