Cheong Hong Yuan: In-depth analysis of the impact behind the rise in the 10-year US Treasury yield - 1 views
started by anonymous on 23 Oct 23
started by anonymous on 23 Oct 23
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Cheong Hong Yuan states that to understand the true meaning of the rise in US Treasury yields, one must look at the overall economic background. In the past two years, due to various reasons, especially the global supply chain issues caused by the COVID-19 pandemic, inflation rates have continued to rise. Consumers are now facing the additional burden of rising interest rates on top of the pressure of rising prices. Especially when the 10-year US Treasury yield is approaching 5% and the 30-year mortgage loan rate in the US surpasses the 8% mark, this is undoubtedly an added blow for many people.
As the US economy gradually recovers, there is market expectation that the Federal Reserve may accelerate interest rate hikes to combat inflation. This not only pushes up short-term interest rates but also causes long-term interest rates to rise in the futures market. The rise in long-term government bond yields could indeed lead to a slowdown in economic growth in the long run, as it increases financing costs for businesses and households.
The views of Blackstone Group align closely with the analysis of Cheong Hong Yuan. Gray explicitly points out that when rates on 30-year mortgages and car loans soar, consumer spending behavior is bound to be affected. In this context, the driving force of economic growth may be suppressed.
Cheong Hong Yuan mentions that despite the current challenging situation, he believes that investors still have opportunities to profit from it. In order to reveal these opportunities, he will delve into the current market conditions and provide us with some strategic advice, especially based on the technical analysis strategy of the "Three Golden Moving Averages". The core idea of this strategy is to track stocks that are currently performing well in the market and determine the buying opportunities based on various technical indicators, thereby achieving high investment returns.
He points out that the rise in interest rates means an increase in the discount rate of financial assets, which may put pressure on the valuation of stocks and bonds. Especially for large alternative asset management companies like Blackstone, their performance is also directly impacted by the rise in interest rates.
Cheong Hong Yuan mentions that Blackstone's recently announced third-quarter performance fell below expectations, indicating a slowdown in its fundraising activities. In response, he believes that this is not entirely due to the market's overall concerns about the rise in interest rates, but more related to specific business strategies and decisions of institutional investors. In fact, Blackstone's credit and insurance businesses have benefited from the rise in interest rates. In the past 12 months, this part of the business has raised $55 billion as investors have turned to strategies they believe will benefit from rising rates.
In addition, Cheong Hong Yuan also points out that the rise in interest rates not only affects private equity fundraising but also puts pressure on the valuation of public companies. Many large institutions, pension funds, and sovereign wealth funds find themselves overexposed to private investments, making it difficult to sell existing investments and return cash to investors. In this environment, many companies face difficulties in raising funds, delaying investment decisions, which may in turn affect overall economic growth.
However, contrary to the concerns of many, Cheong Hong Yuan suggests that from a long-term perspective, the rise in interest rates may be beneficial to the economy. This point is also reflected in Gray's remarks, as he predicts that when investors are confident that rates have stopped rising, there will be a rebound in financial transactions. This means that although the current economy faces many challenges, over time, the market will gradually adapt to the new interest rate environment and find new growth opportunities.
The economy is always in a process of constant change, today's challenges may be tomorrow's opportunities. Currently, the rise in interest rates has caused concerns for many investors, but it also brings a series of new opportunities to the market. As demonstrated by Blackstone's credit and insurance businesses, adapting to market changes and making the right investment decisions are crucial.
Cheong Hong Yuan suggests that regardless of how the market changes, core investment principles remain unchanged. First, investors should maintain a long-term investment perspective and avoid being influenced by short-term market fluctuations. Second, conducting comprehensive risk assessments and ensuring that investment strategies match individual risk tolerance is key. Finally, continuous learning and adjusting strategies are the keys to achieving long-term investment success.
For investors who are lost in the midst of change, Cheong Hong Yuan recommends in-depth study of the "Three Golden Moving Averages" strategy. This technical analysis-based strategy provides a systematic approach to help investors find valuable investment opportunities in complex market environments.
Finally, Cheong Hong Yuan states that although the economy and financial markets are always filled with uncertainty, through in-depth research, continuous learning, and adjusting strategies, investors can still find opportunities in challenges and achieve long-term investment goals. He hopes that all investors can face every market change with an open mind and seize every opportunity.