|
WIDENING US INTEREST SPREAD AFFECTS BOND- AND STOCK-MARKETS
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).
|
