- 10-year US Treasury yield climbed back up to 3.69% at close on Friday after a strong payrolls report. The 2-year yield jumped to 4.50% (page 2)
- Real yields holding above 1.5%. Recent robust labour market data suggesting that real yields may need to rise further from here to slow the economy (page 7)
- Nevertheless, it was a good week for some of the riskier segments of the credit market, with private credit and high yield corporate bonds rallying (pages 13-15)
- The stock market is taking higher real yields in its stride too. The FTSE Renaissance IPO index gained 5.6% last week. The broader Philly Sox index is up 38.3% YTD. Nasdaq has gained 26.5% YTD (pages 14, 42)
- Apple, Alphabet, Microsoft, Meta, Amazon, Nvidia, Tesla, Netflix account for 29.4% of the S&P 500. Information technology has led the way YTD, up 35.8%, followed by communication services (+33.8% YTD). S&P 500 up 11.5% YTD, but up only 1.5% on an equal-weight basis (pages 42-44)
- TOPIX surges to a new high, as yen falls below 140. TOPIX up 17.3% in yen terms and 10.9% in $ terms (page 40)
- Rise in Gilt yields paused last week. Sterling strength, a notable contrast to the sell-off in the pound that accompanied the Truss mini-budget spike in Gilt yields (pages 19, 30)
- Rally in BTPs. Eurozone spreads tighten (as headline inflation picture improves) (pages 26-28)
- Chinese RMB weakens on a trade-weighted basis: data continue to underwhelm, with disinflationary/deflationary risks growing. CGBs continue to rally (pages 31, 53)
- Korean won strengthens, by contrast, after a period of weakness in semiconductors. This mirrors the jump in AI/semiconductor shares. Currency markets starting to bet that South Korea will be a beneficiary of China decoupling (page 31)
- Turkish lira continues to weaken (page 61)
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