Transversal

Private investor. Casually looking for yield across global equity markets.

[Transversal @Transve44097443]

@Fullcarry @JeremyWS Why is all the nominal yield term premium in the real yield and none in the breakeven? That’s what I don’t get. It should be the other way around if anything.

[Transversal @Transve44097443]

@DannyDayan5 @BobEUnlimited @AahanPrometheus Ok, so you’re saying that the Fed bought too many nominal bonds and NOT enough TIPS (relative to nominals). Fair, but with nominal yields now reversing, shouldn’t breakevens then widen accordingly?

[Transversal @Transve44097443]

@DannyDayan5 @BobEUnlimited @AahanPrometheus But, if that was the reason (Fed buying too many TIPS), shouldn’t breakevens overshoot realised CPI growth, rather than the other way around?

[Transversal @Transve44097443]

@DannyDayan5 @BobEUnlimited @AahanPrometheus Exactly. What prevents breakevens from being much higher? Shouldn't most of the nominal yield term premium be in there, rather than in the real yield component?

[Transversal @Transve44097443]

@Fullcarry Even more interesting than the absolute level of TP, to me, is how TP will be apportioned between real yields and breakevens. At the moment all the TP seems to be in reals, would you agree that a natural consequence of more policy volatility should be structurally higher BEIs?

[Transversal @Transve44097443]

@dampedspring Isn't long 10Y BEI @ 2.20% a better trade than long 10Y USTB or 2Y10Y flattener?

[Transversal @Transve44097443]

@onechancefreedm Your point about the steepening in real yields representing a TP (as opposed to growth) repricing, makes sense to me. What’s your view on LT real yields in AUD being even higher than in USD? Does a 25Y AUD RY at 3.08% seem logical to you, given the debt+deficit dynamics in AUD?

[Transversal @Transve44097443]

@countdraghula Agree, the "gut response" is the only plausible explanation I can find, and ST reals are indeed a lot lower. LT reals at ~2.75% pa (in AUD) on the other hand look like a fat pitch to me at the moment.

[Transversal @Transve44097443]

@countdraghula That's what I'm saying: the nominal yield curve doesn't need to go down if breakevens rise enough, as they should. Why do you think breakevens are this low, if the deflation tail doesn't need to be priced in?

[Transversal @Transve44097443]

@countdraghula Count, if the deflation tail is chopped off as you say (which does make sense to me), shouldn't the negative growth / higher inflation impulse be naturally conducive to lower real yields, as a consequence of much higher breakevens and nominals having limited upside?

[Transversal @Transve44097443]

@rubiconcapital_ @PythiaR Do your multiples factor in the fact that there are patent expirations for both Natroba (2033) and Absorica (2035)? How do you quantify the terminal value post patent expiry?

[Transversal @Transve44097443]

@Valueinvest_ The way I read their Dec 27th Ann is that $OBL have committed 100mUS$ per fund (4 and 5) by the end of FY24. Sure, CF from the existing case book plus undrawn debt will help, but might not be enough.

[Transversal @Transve44097443]

@macrokurd AUDUSD ref. 0.6665

[Transversal @Transve44097443]

@macrokurd Long the 2050 AUD I/L Govt Bond @ 2.185% pa real yield; price ref. 91.93

[Transversal @Transve44097443]

@pinebrookcap Why not long the corresponding tenors in TIPS, given that a) the Sep selloff has been driven by reals, and b) your view is (also) one of slowing growth? Do you expect breakevens to soften noticeably from here?

[Transversal @Transve44097443]

@dampedspring @MacroAlf Fair enough

[Transversal @Transve44097443]

@SmallCapEagle The way I read it is that they are aiming for a lower [Marketing spend]/Revenue in a lower-growth environment. Part of it may be proactive (e.g. less TV advertising) and part of it due to increased confidence that CACs have peaked (thanks to less intense competition for ad space)

[Transversal @Transve44097443]

@LT3000Lyall @guydavisvalue @ruixiang_tan Lyall, do you mean the depository institutions will (once foreigners are allowed to sell on the MOEX) liquidate the underlying MOEX shares corresponding to any DRs that haven’t been converted up to that point, and then distribute the proceeds to the residual DR holders?