06 FEBRUARY 2022

Our 'Chart of the Week' displays the interest rate spread between 10yr US government bonds and 3m US treasuries over the past 30 years. The last downward trend lasted about 10 years, from 2010 to 2020, and reflected the era of massive quantitative easing, expanding fiscal budgets, and very low capital costs for growth stories. Since 2020, it seems that a new upward trend has started.

This most recent widening of the interest rate spread can be seen as an indicator for a combination of rising inflation- and growth-expectations, and affects the bond markets and the equity markets alike: Capital costs and discount factors for valuation models are rising which currently causes value stocks to outperform growth stocks. The maritime sector is a classical value story and should continue to benefit from this move. However, increasing capital costs may start to bite into shipping companies' cash flows. We expect more and more shipping companies to opt for fixed-rate bonds or loans or interest rate swaps in order to hedge their funding costs in the coming months.

In the last week, we noticed some remarkable portfolio shifts. Both the crude tanker- and bulker-sector gained whereas liner companies took a breather. Investors seem to reposition themselves for a recovery of the Capesize- and VLCC-markets and adjusted their positions, accordingly. 

The Notos Maritime Sentiment continued its recovery which is confirmed by the 50 days moving average picking up, again. Our trading strategy gained 4.1 percent and outperformed its benchmark (3.4 percent).

This document has been prepared and approved by Notos Consult GmbH and is for informational purpose only. The information presented in this report is intended for the recipient to whom it was delivered. Reproduction or distribution of this document in whole or in part is not permitted without the express written consent of Notos Consult GmbH.

This document contains forward-looking statements. We caution the reader that forward-looking statements are not guarantees of future performance. Past returns are no indication of future returns. The development of the industry, 
markets, and companies described in this document may differ materially from the forward-looking statement contained herein.

Information and opinions contained in this document have been compiled from sources believed to be reliable. Unless otherwise stated, any statements herein are based on our own estimates at the time of publication. Notos Consult GmbH makes no representation as to the accuracy or completeness of any of the information contained herein and accepts no liability for loss arising from the use of the information provided. 

This document is not an offer of any kind. This report has been prepared separately from any proposed offering of any security and as such information herein must not be relied upon as having been authorized or approved by the issuer of such security.

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