Morgan Stanley IM: Duration – Friend or Foe?
Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.24.04.2024 | 07:10 Uhr
- When times get tough, you often call a friend for help.
- In market terms, when an equity sell-off occurs, you often buy bonds, aka duration, as a hedge.
- At least that’s the way it used to be. This comes from the 1981-2021 playbook, when bonds were in a 40-year bull market.
- But, what if the game has changed? Well then the old playbook is outdated and less useful.
- So what changed the game? Inflation and the related risks that ended the bull market in bonds.
- We believe we have now entered a new regime, where bonds are not the easy hedge to equities.
- As such, can duration be a trusted and time-honored reliable hedge to equity volatility? Is duration is a friend or foe? We discuss in this audiocast.
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