Bonds Continue to Showcase Strength

Since the fundamentals continue to perform as expected, it’s become a game of patience until the next big move arrives:

  1. AI stocks and bonds are under immense pressure, as CDS spreads continue to skyrocket.

  2. CoreWeave, Iren, and Cipher Digital have crashed and remain at the epicenter of the next ‘Lehman moment.’

  3. CCC bond spreads are still above 13% and signal immense stress for the riskiest borrowers across all industries.

  4. Many cyclical assets are in bear markets and continue to hit new lows.

  5. Bond volatility is falling while equity volatility is increasing.

Speaking of which, I wrote on September 26:

“The underperformance of Rio Tinto continues to grow. The commodities giant should be surging as the global economy booms, and it enjoys endless demand for its cyclical metals and materials. Yet, the opposite is happening.

The chart below shows how Rio Tinto (black line) is heading for its July lows, while copper (blue line) remains convinced that growth is invincible. The pair have a long history of travelling together, so when copper gets the message, the Minsky Moment should also ripple across currencies and rates.”

Well, with copper now feeling the pain, the fundamentals continue to support our bond position.

The risks of a credit crisis are rising, and subscribers are fully informed on how to manage volatility and think like a professional investor.

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As always, I appreciate your questions and feedback, so please comment below if anything is on your mind.

See you next week,

Alex Demolitor, CFA