The bond market finally got the Federal Reserve’s message on rates, while stock investors continue to ignore it, for the most part.
While the mood music soured in the latter half of the week, equities are still largely defying the one thing that has repeatedly proved kryptonite in past rallies: surging interest rates.
With a slew of Fed officials threatening to ramp up rate hikes after still-hot economic data, Treasury yields broke out anew and traders raised their expectations for how high the benchmark rate will go.
Yet the S&P 500 finished the week lower by just 0.3 per cent, and the Nasdaq 100 eked out a 0.4 per cent gain as still-loose financial conditions bely the most-aggressive policy tightening campaign in a generation.
The brutal repricing in the two-year Treasury note would imply a 5 per cent to 10 per cent slump in the Nasdaq 100 and more for volatile tech equities, if past market moves are anything to go by, according to JPMorgan Chase & Co's Marko Kolanovic.
However, still-resilient equities have diverged from fresh bond losses, a potentially unsustainable development.
That could mean bad news for hedge-fund managers who have snapped up tech shares over the past two weeks, and bodes ill for balanced-portfolio strategies that are still reeling from last year’s bond-stock crash.
“The key risk is that we are dealing with a bit of a replay from last year,” said Christian Mueller-Glissmann, the head of asset allocation for portfolio strategy at Goldman Sachs Group.
“If you have high inflation risk and high macro volatility, then both equities and bonds can go down together. And that is the key concern for us after this bullish sentiment shift — that we could get another 60/40 drawdown.”
So far, that’s been anything but a problem.
Both assets rallied to start the year before surprisingly strong hiring data, housing numbers and retail sales, along with more hawkish Fed commentary sent Treasuries into a tailspin this month. Stocks, meanwhile, are essentially flat in February, holding onto gains from the second-best January in two decades.
“We’re not bullish on the stickiness of this as we don’t see any type of Fed pivot” from rate hikes in the near term, Nicole Webb, senior vice president and financial advisor at Wealth Enhancement Group, told Bloomberg.
That’s not to say cracks aren’t showing in the equity rally. The tech-heavy gauge ended the week with a two-day slump of 2.6 per cent. And the riskiest part of the credit market showed minor signs of distress.
Both the iShares iBoxx High Yield Corporate Bond ETF and the SPDR Bloomberg High Yield Bond ETF declined this week, and are each trading below their 50-day moving average lines.
The market is mispricing both inflation and rates. The challenge from here is that we are vulnerable to disappointment both on growth and inflation
Christian Mueller-Glissmann,
head of asset allocation for portfolio strategy at Goldman Sachs Group
Central bankers are thought to look askance on unbridled equity gains because of their potential to fan consumption and prices. Right now, both stocks and the economy are humming along, normally a welcome pairing.
Too much of a good thing could prove a problem should the cycle build on itself, however. Particularly if financial market resilience comes to be seen as one of the things keeping consumers from reining themselves in.
Stock investors have been betting on a Goldilocks-like scenario, with growth remaining resilient and inflation cooling fast by the second half of the year. Mr Mueller-Glissmann says that’s likely wrong. The bank’s economists say that the Fed can engineer a soft landing, but they also think that to get a handle on inflation, growth has to slow.
“If the Fed has to go further to achieve that, then it will happen. The market is pricing a no-landing — we definitely take the other side on that because it’s a bit too optimistic,” he said.
Goldman recommends a defensive positioning for risky assets, including buying put options and going overweight cash, while also adopting underweight positions in bonds due to expectations of higher rates.
“The market is mispricing both inflation and rates. The challenge from here is that we are vulnerable to disappointment both on growth and inflation,” he said.
What are the influencer academy modules?
- Mastery of audio-visual content creation.
- Cinematography, shots and movement.
- All aspects of post-production.
- Emerging technologies and VFX with AI and CGI.
- Understanding of marketing objectives and audience engagement.
- Tourism industry knowledge.
- Professional ethics.
Company%C2%A0profile
%3Cp%3E%3Cstrong%3ECompany%20name%3A%20%3C%2Fstrong%3Eamana%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3E2010%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Karim%20Farra%20and%20Ziad%20Aboujeb%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EUAE%3Cbr%3E%3Cstrong%3ERegulator%3A%20%3C%2Fstrong%3EDFSA%3Cbr%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3EFinancial%20services%3Cbr%3E%3Cstrong%3ECurrent%20number%20of%20staff%3A%20%3C%2Fstrong%3E85%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%20%3C%2Fstrong%3ESelf-funded%3Cbr%3E%3C%2Fp%3E%0A
Global state-owned investor ranking by size
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1.
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United States
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2.
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China
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3.
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UAE
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4.
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Japan
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5
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Norway
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6.
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Canada
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7.
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Singapore
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Australia
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Saudi Arabia
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South Korea
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Company%20profile
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RESULTS
Catchweight 82kg
Piotr Kuberski (POL) beat Ahmed Saeb (IRQ) by decision.
Women’s bantamweight
Corinne Laframboise (CAN) beat Cornelia Holm (SWE) by unanimous decision.
Welterweight
Omar Hussein (PAL) beat Vitalii Stoian (UKR) by unanimous decision.
Welterweight
Josh Togo (LEB) beat Ali Dyusenov (UZB) by unanimous decision.
Flyweight
Isaac Pimentel (BRA) beat Delfin Nawen (PHI) TKO round-3.
Catchweight 80kg
Seb Eubank (GBR) beat Emad Hanbali (SYR) KO round 1.
Lightweight
Mohammad Yahya (UAE) beat Ramadan Noaman (EGY) TKO round 2.
Lightweight
Alan Omer (GER) beat Reydon Romero (PHI) submission 1.
Welterweight
Juho Valamaa (FIN) beat Ahmed Labban (LEB) by unanimous decision.
Featherweight
Elias Boudegzdame (ALG) beat Austin Arnett (USA) by unanimous decision.
Super heavyweight
Maciej Sosnowski (POL) beat Ibrahim El Sawi (EGY) by submission round 1.
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
UAE currency: the story behind the money in your pockets
Elvis
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The specs
Engine: 2.2-litre, turbodiesel
Transmission: 6-speed auto
Power: 160hp
Torque: 385Nm
Price: Dh116,900
On sale: now
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
Copa del Rey final
Sevilla v Barcelona, Saturday, 11.30pm (UAE), match on Bein Sports
MATCH INFO
FA Cup fifth round
Chelsea v Manchester United, Monday, 11.30pm (UAE), BeIN Sports
Gothia Cup 2025
4,872 matches
1,942 teams
116 pitches
76 nations
26 UAE teams
15 Lebanese teams
2 Kuwaiti teams
BRIEF SCORES
England 228-7, 50 overs
N Sciver 51; J Goswami 3-23
India 219, 48.4 overs
P Raut 86, H Kaur 51; A Shrubsole 6-46
England won by nine runs
Did you know?
Brunch has been around, is some form or another, for more than a century. The word was first mentioned in print in an 1895 edition of Hunter’s Weekly, after making the rounds among university students in Britain. The article, entitled Brunch: A Plea, argued the case for a later, more sociable weekend meal. “By eliminating the need to get up early on Sunday, brunch would make life brighter for Saturday night carousers. It would promote human happiness in other ways as well,” the piece read. “It is talk-compelling. It puts you in a good temper, it makes you satisfied with yourself and your fellow beings, it sweeps away the worries and cobwebs of the week.” More than 100 years later, author Guy Beringer’s words still ring true, especially in the UAE, where brunches are often used to mark special, sociable occasions.
Company%20Profile
%3Cp%3E%3Cstrong%3ECompany%3A%3C%2Fstrong%3E%20Astra%20Tech%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3EMarch%202022%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EDubai%3Cbr%3E%3Cstrong%3EFounder%3A%20%3C%2Fstrong%3EAbdallah%20Abu%20Sheikh%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20technology%20investment%20and%20development%3Cbr%3E%3Cstrong%3EFunding%20size%3A%3C%2Fstrong%3E%20%24500m%3C%2Fp%3E%0A
COMPANY PROFILE
Initial investment: Undisclosed
Investment stage: Series A
Investors: Core42
Current number of staff: 47
Credit Score explained
What is a credit score?
In the UAE your credit score is a number generated by the Al Etihad Credit Bureau (AECB), which represents your credit worthiness – in other words, your risk of defaulting on any debt repayments. In this country, the number is between 300 and 900. A low score indicates a higher risk of default, while a high score indicates you are a lower risk.
Why is it important?
Financial institutions will use it to decide whether or not you are a credit risk. Those with better scores may also receive preferential interest rates or terms on products such as loans, credit cards and mortgages.
How is it calculated?
The AECB collects information on your payment behaviour from banks as well as utilitiy and telecoms providers.
How can I improve my score?
By paying your bills on time and not missing any repayments, particularly your loan, credit card and mortgage payments. It is also wise to limit the number of credit card and loan applications you make and to reduce your outstanding balances.
How do I know if my score is low or high?
By checking it. Visit one of AECB’s Customer Happiness Centres with an original and valid Emirates ID, passport copy and valid email address. Liv. customers can also access the score directly from the banking app.
How much does it cost?
A credit report costs Dh100 while a report with the score included costs Dh150. Those only wanting the credit score pay Dh60. VAT is payable on top.
FOOTBALL TEST
Team X 1 Team Y 0
Scorers
Red card
Man of the Match
Killing of Qassem Suleimani
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
ESSENTIALS
The flights
Emirates flies from Dubai to Phnom Penh via Yangon from Dh2,700 return including taxes. Cambodia Bayon Airlines and Cambodia Angkor Air offer return flights from Phnom Penh to Siem Reap from Dh250 return including taxes. The flight takes about 45 minutes.
The hotels
Rooms at the Raffles Le Royal in Phnom Penh cost from $225 (Dh826) per night including taxes. Rooms at the Grand Hotel d'Angkor cost from $261 (Dh960) per night including taxes.
The tours
A cyclo architecture tour of Phnom Penh costs from $20 (Dh75) per person for about three hours, with Khmer Architecture Tours. Tailor-made tours of all of Cambodia, or sites like Angkor alone, can be arranged by About Asia Travel. Emirates Holidays also offers packages.
MATCH INFO
Syria v Australia
2018 World Cup qualifying: Asia fourth round play-off first leg
Venue: Hang Jebat Stadium, Malayisa
Kick-off: Thursday, 4.30pm (UAE)
Watch: beIN Sports HD
* Second leg in Australia on October 10
