Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Only U.S. Bonds Were Spared From Last Week’s Widespread Losses

By James PicernoBondsNov 29, 2021 04:36PM ET
www.investing.com/analysis/only-us-bonds-were-spared-from-last-weeks-widespread-losses-200609835
Only U.S. Bonds Were Spared From Last Week’s Widespread Losses
By James Picerno   |  Nov 29, 2021 04:36PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Was Friday’s selling wave overdone? Too early to tell, but the damage from last week’s sudden bout of risk-off left all the major asset classes in red – except U.S. bonds, based on a set of ETFs as of Friday’s close (Nov. 26).

Vanguard Total Bond Market Index Fund ETF (NASDAQ:BND) bucked the trend and posted a fractional 0.05% weekly gain. The slight advance marks the second straight weekly increase for the fund, which holds a variety of investment-grade fixed-income securities.

BND Weekly Chart.
BND Weekly Chart.

Otherwise, it was losses across the board for the major asset classes, ranging from a mild -0.1% retreat in foreign government bonds in developed markets (BWX) to a hefty 4.0% tumble in emerging markets stocks (Vanguard FTSE Emerging Markets Index Fund ETF Shares (NYSE:VWO)).

Another week of widespread losses weighed on the Global Market Index — an unmanaged benchmark (maintained by CapitalSpectator.com) that holds all the major asset classes (except cash) in market-value weights via ETF proxies. GMI fell 2.1%, a third straight weekly loss.

There are signs in early trading today that global markets are stabilizing after Friday’s rout. But some analysts are preparing for more volatility.

“Despite the irresistible pull of buying-the-dip on tenuous early information on Omicron, we are just one negative Omicron headline away from going back to where we started,” Jeffrey Halley, a senior market analyst at Oanda, advises in a research note. “Expect plenty of headline-driven whipsaw price action this week.”

But other strategists are inclined toward a contrarian approach. “We would be aggressive buyers of this pullback,” advises Fundstrat’s Tom Lee in a note to clients on Sunday night. “As with the case for Beta and Delta variants, the ‘bark’ has proven worse than the bite in each of those precedent instances. The market carnage, in our view, will be short-lived and transitory.”

Maybe, but the uncertainty about Omicron inspires caution, writes the co-chief investment officer and chief market strategist at Truist Advisory Services. “The pandemic and COVID variants remain one of the biggest risks to markets, and are likely to continue to inject volatility over the next year(s),” counsels Keith Lerner via a note on Friday. “It’s hard to say at this point how lasting or impactful this latest variant will be for markets.”

Meanwhile, reviewing the major asset classes through a one-year trend reflects a mixed bag of results. The top performer: U.S. real estate investment trusts (REITs) via Vanguard US Real Estate (VNQ), which is up a strong 31.2% for the year through Friday’s close.

At the opposite extreme: bonds issued by governments in emerging markets (EMLC) – the loss in this corner is approaching -9% over the past year.

GMI.F’s one-year performance is a solid 15.3% at the moment.

Drawdowns are starting to deepen across the major asset classes after last week’s selling. The smallest peak-to-trough decline is currently found in U.S. inflation-indexed Treasuries (iShares TIPS Bond ETF (NYSE:TIP)), which ended last week at -0.8% below its previous peak.

Otherwise, most drawdowns are in the -2% to -9% range. The big downside outliers: stocks and bonds in emerging markets (VWO and EMLC, respectively) and commodities (GCC).

GMI.F’s current drawdown: -3.0%.

Only U.S. Bonds Were Spared From Last Week’s Widespread Losses
 

Related Articles

Tim Knight
Time To Short Bonds By Tim Knight - Jan 20, 2022 1

I’d like to suggest this is an opportune time to short bonds by way of iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT).This is based on an enormous topping pattern that I perceive...

ValueWalk
These Are The Top Ten Nontraditional Bond Funds By ValueWalk - Jan 16, 2022

Nontraditional bond funds aim to avoid losses and earn a return that is uncorrelated with the overall bond market. Such funds deploy several strategies to achieve their objectives,...

Only U.S. Bonds Were Spared From Last Week’s Widespread Losses

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
William Bailey
William Bailey Nov 29, 2021 11:33PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Omicron Pusi i 8 scam ! Powell begging for free cash already from Congress! Why didnt powell beg with Delta?! Hmmm
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email