This is from yesterday, but I didn’t get around to it. It may be of interest for those with gold exposure/trading.
Its from Russ Koesterich, CFA, Chief Investment Strategist for BlackRock and iShares Chief Global Investment Strategist. BlackRock is a multinational investment management corporation based in New York City with $4.59 trillion in assets under management. I posted some thoughts from them earlier in the week, here: “A very significant period of transition” … What is the Federal Reserve rate rise timeline to watch for?
Koesterich says:
- Federal Reserve period of rate normalization is approaching.
- He therefore advocates caution toward two asset classes in particular, “Treasury bonds with two- to five-year maturities (and) Commodities like gold.
On T-bonds:
- the prospect for an early Fed tightening is exerting downward pressure on the prices of shorter-maturity Treasury bonds — particularly those with two- to five-year maturities — and pushing yields higher. I continue to advocate caution toward these maturities, as I expect they will prove the most vulnerable if the Fed does in fact accelerate the timetable of the first rate hike
On “Commodities like gold”:
- The prospect for tighter monetary conditions is driving the dollar higher and putting downward pressure on many commodities
- Most agricultural commodities are down between 5% and 10% year-to-date, and oil prices have slid on less angst over Iraq and the Middle East
- Among these various commodities, I remain particularly cautious of precious metals given their sensitivity to higher real rates
More at the article: How to Position Your Portfolio as Rates Start to Rise
