In this Weekly commentary, we will recap:
- The Surge in Bond Yields: What is Behind it and What it Means
- BRICS: Adding New Members into the Bloc
- NVIDIA’s Winning Streak Continues: The Quarterly Results Are In
The Surge in Bond Yields: What is Behind It and What It Means
Over the past few weeks, Treasury yields have surged. These yields are now approaching their peak levels since 2007.
Reasons behind the move:
- Growing optimism among investors regarding economic growth. The US economy has stayed resilient in the face of tighter monetary policies
- The government has signaled plans to augment long-duration debt issuance.
- The crowded trade in long-term US Treasuries is unwinding, further influencing the yield movement.
Our Perspective: While the current sell-off in bonds is noteworthy, it seems to surpass underlying economic fundamentals. Inflation data have softened in major economies. For instance, the US Core CPI for July dropped to 4.7%, marking the most reassuring figure since 2021. In addition, there are certain economic soft spots. Notably, the manufacturing sector seems to be contracting, as indicated by the ISM Manufacturing survey’s descent below 50.
Keep Calm and Stay Invested: It Pays to Take the Long-term View Our analysis suggests that, given the enticing yields and the Fed’s nearing completion of its rate-hiking cycle, high-quality bonds present a compelling opportunity. Historically, these bonds have shown impressive one-year returns post the cessation of rate hikes.
One Year Return of Bonds After the End of Rate HIkes (Past 4 Hiking Cycles)
In today’s fluctuating financial climate, investors often face the temptation to time the market, hoping to buy low and sell high. Yet, historical data and market dynamics consistently illustrate the advantage of a long-term approach, especially within the fixed income landscape.
As we navigate the ebb and flow of financial markets, taking the long view can often be the most rewarding. Keeping calm, focusing on quality, and placing trust in proven strategies—like those presented by Syfe’s Income+—investors position to optimize market opportunities. Remember, enduring short-term market fluctuations with a long-term vision is often the cornerstone of successful investing.
BRICS: Adding New Members into the Bloc
BRICS stands for Brazil, Russia, India, China and South Africa. In the recent BRICS summit, it was announced that the six new countries – Argentina, Egypt, Iran, Ethiopia, Saudi Arabia and the United Arab Emirates – are set to join in January
What caught our attention? There is growing buzz around “De-dollarization”. With Saudi Arabia joining the BRICS, discussions are naturally veering towards trading in non-dollar currencies. These nations aspire to break away from the dollar’s influence and chart their own economic path. Could a BRICS common currency be the answer? Although we may not see such a currency anytime soon, the group’s expansion signals a notable shift in the global political landscape. And while the US dollar holds its ground, it’s essential to keep an eye on these evolving dynamics.
NVIDIA’s Winning Streak Continues: The Quarterly Results Are In
Nvidia has consistently stood out in the stock market.Once again, it has posted another impressive quarterly results.
- Record revenue of $13.51 billion, a jump of 88% from Q1 and 101% year-over-year.
- Record Data Center revenue of $10.32 billion, marking a 141% rise from Q1 and a staggering 171% growth from the previous year.
- Nvidia has consistently met and surpassed expectations in the past few quarters, even with optimistic guidance in past quarters.
What we like about Nvidia: Nvidia is the leader in the AI industry. Its comprehensive ecosystem, from GPUs to software frameworks, tackles AI challenges from computer vision to natural language processing. Developers can easily leverage this using the CUDA framework and familiar languages. Moreover, Nvidia’s AI Platform, strategic partnerships with tech titans like Amazon and Microsoft, key acquisitions, and groundbreaking innovations like the NVIDIA Omniverse underscore its dominant market position.
Points of Caution: While NVIDIA stands strong, challenges loom. Major vendors like Amazon’s AWS, Microsoft, Google, and Meta may look to lessen their NVIDIA dependence by diversifying their suppliers or creating in-house solutions. Notably, Google’s TPUs, Amazon’s specific AI chips, and design plans from Microsoft and Meta signal this shift. Meanwhile, AMD expands its GPU offerings, and Intel remains invested in AI accelerator products.
Source: Google Finance, Bloomberg, Yahoo Finance, CNBC, Financial Times, Reuters, Business Times, CNN, Fashion United