The bond market made an epic move over this past week. We’ve seen further evidence that multi-year highs in global bond markets came in July 2016.
So what are some of the results of a rising rates market?
The obvious trades so far have been long banks and short utilities, REITS and other groups offering shareholders yield.
One thing I’d like to point out is there are tons of poorly run companies around the world saddled in debt. These companies are essentially zombies, existing while creating little value and adding no economic progress. They’ve been able to restructure debt for years at low rates. That time appears to be over.
Ultimately, many of these companies will die off if rates continue to normalize.
If there is any advice in this post, it’s don’t be afraid of those headlines.
Make no mistake, it’s sad any time jobs are lost. Alas, it won’t be something for market participants to fear, it’s just the economic machine working and doing it’s job.
There’s a great chance we’ll see corporate bankruptcies sky rocket during Trump’s time in the White House. How ironic that would be…