Global equity markets have rallied in 2003, but over the last few weeks appeared to have stalled. June saw the yield on long term bonds at record lows, but these spiked up very sharply in July and August, resulting in large losses for bonds holders - the implications of this spike in rates is widespread.

Locally, the equity market picked up some of the gains experienced by global markets, but were restrained somewhat by the very firm rand. Yields on bonds have also stalled and the latest inflation data indicates that ever-lower interest rates could be slower process than previously expected. This in turn has helped maintain the rand at its firmer levels.

US interest rates:

In June, I spoke about US 10 year Treasuries at yields of 3,3%. The yield went down to around 3,1% and then spiked up sharply over the next two months to its current 4,5%, with most of the rise in yields occurring in July. The result has been losses for existing bondholders, a huge rise in mortgage and refinancing applications in July and pressure on the mortgage industry in the US.

For the full report which details the impact of the higher US rates on US equities and the local bond market, click here ....

The Market Focus report also provides expected returns from the local equity and bond asset classes, as well as return stats on the past recommended portfolio and three additional shares to add to your portfolio.

Click here......

Posted: 2003/08/29 16:16 View Archive

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