How does gold respond when US credit spreads widen?

Authored by Johan Palmberg and Adam Perlaky:?

  • Gold tends to rally when credit spreads widen…
  • …but that’s usually the case when the move in credit spreads is driven by broader systemic risks
  • US spreads have only recently begun to widen. Should this environment of higher inflation and geopolitical tension draw itself out, widening spreads are likely to signal further support to gold

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Stagflation strikes back

Authored by Krishan Gopaul and Johan Palmberg

  • The risk of stagflation has increased materially since we addressed the topic last year
  • Europe appears to be at greater risk than the US, due to higher exposure to soaring commodity prices and a weaker economic position, but alarm bells could soon ring across the Atlantic, too
  • Year-to-date, gold has performed well, arguably reflecting the Ukraine crisis and the ongoing reflationary environment
  • But should stagflation become widespread it could provide further support for gold as a diversifier and risk hedge

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Stocks go down, bonds go... down?

Authored by Louise Street and Johan Palmberg: The conventional wisdom that stocks and bonds are negatively correlated is a central component of most asset allocation strategies. But the correlation hasn’t always been negative – far from it, in fact – and there are increasing signs of strain in the relationship, prompting investors to ask: could the stock-bond correlation flip? In this blog, we consider that possibility, what it might mean for the average portfolio, and how gold could help to protect portfolio performance.

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Inflation Roundtable

During a virtual round table, in partnership with European Pensions, a panel of industry experts consider the medium and long-term prospects for inflation, its potential impact on portfolios and the hedging tools available for pension funds to prepare for whatever the future may hold.

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