The ugly drop in bond prices has finally slayed TINA – the there is no alternative mantra that has dominated financial markets, particularly since the start of the pandemic
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But the happy news is that the ugly drop in bond prices has finally slayed TINA – the there is no alternative mantra that has dominated financial markets, particularly since the start of the pandemic. Sure, that is below the rate of inflation in pretty much any developed country. But it certainly sounds more appealing than high-tech growth stocks. Nasdaq Composite stocks have fallen about 26 per cent this year, or crypto , or putting your cash in a bin and setting fire to it, which is roughly the same thing. Remember to use metal bins, crypto bros.
Higher borrowing costs are definitely a bitter pill for companies to swallow – but for investors, happy days. There is no free lunch in markets. Companies default sometimes, especially in recessions. Flaky market conditions in times of stress mean that sometimes, even if they want to, fund managers cannot get their money out of corporate debt in a hurry.
“We have had a reset in the fixed income environment here. For now, the biggest actions have yet to be taken, but the conversations we’re having with large institutional investors suggest you are going to see large asset allocation changes coming through in the next 12 months.”
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