Around The World - Equities, Bonds, Rates, Currencies, Cryptos And Gold

by: The Fortune Teller


2018 seems like a very volatile year with equities leading the way, especially in the developed markets.

Bonds, on the other hand, are experiencing one of their worst years in decades, a direct result of tighter monetary policies.

Emerging currencies are getting beaten severely against the US Dollar. So are crypto-currencies.

As for gold? Neither a safe heaven, nor an investment worth your money.

Image result for across the world


Percentage Below All-Time High of Popular Country ETFs (from bottom to top)

  • Nigeria (NGE): -66%
  • Turkey (TUR): -61%
  • Russia (RSX): -56%
  • Brazil (EWZ): -50%
  • Italy (EWI): -41%
  • Indonesia (EIDO): -26%
  • China (FXI): -23%
  • Spain (EWP): -23%
  • South Korea (EWY): -16%
  • Germany (EWG): -12%
  • Japan (EWJ): -9%
  • UK (EWU): -7%
  • India (PIN) -5%
  • Canada (EWC): -5%
  • US (SPY): 0% (principally, at an all-time high)

Unsurprisingly, emerging markets are the ones that got hit the most. About half of the countries in the above list already witnessed their equity market moving into a bear territory (20%+ decline from the recent high)

Global Equity Returns YTD (based on the MSCI indices)

On a YTD basis the picture looks different, especially for a market like Russia that has seen its all-time-high few years ago. For Turkey and Greece (GREK), on the other hand, it's kinda same old.


Bond ETF Returns (from top to bottom)

  • Invesco Senior Loan ETF (BKLN): +2.3%
  • iShares iBoxx $ High Yield Corp Bd ETF (HYG): +1.7%
  • iShares Floating Rate Bond ETF (FLOT): +1.6%
  • Vanguard Total International Bond ETF (BNDX): +1.1%
  • SPDR® Blmbg Barclays 1-3 Mth T-Bill ETF (BIL): +0.9%
  • iShares 1-3 Year Treasury Bond ETF (SHY) : +0%
  • iShares National Muni Bond ETF (MUB): -0.5%
  • iShares TIPS Bond ETF (TIP): -0.7%
  • iShares MBS ETF (MBB): -1.2%
  • iShares 3-7 Year Treasury Bond ETF (IEI): -1.2%
  • iShares CMBS ETF (CMBS): -1.3%
  • iShares Core US Aggregate Bond ETF (AGG): -1.6%
  • iShares 7-10 Year Treasury Bond ETF (IEF): -2.5%
  • iShares iBoxx $ Invmt Grade Corp Bd ETF (LQD): -3.4%
  • VanEck Vectors EM High Yield Bond ETF (HYEM): -4%
  • iShares J.P. Morgan USD Em Mkts Bd ETF (EMB): -4.6%
  • iShares 20+ Year Treasury Bond ETF (TLT): -4.9%
  • VanEck Vectors J.P. Morgan EM LC Bd ETF (EMLC): -6.4%
  • PIMCO 25+ Year Zero Coupon US Trs ETF (ZROZ): -7.3%

Note that the worst-performing segments are emerging markets (we'll get to those again) and the long-duration ETFs.


3-Month Treasury Bill Yield in August Since the Subprime Crisis

  • Aug '09: 0.19%
  • Aug '10: 0.15%
  • Aug '11: 0.03%
  • Aug '12: 0.11%
  • Aug '13: 0.05%
  • Aug '14: 0.03%
  • Aug '15: 0.06%
  • Aug '16: 0.29%
  • Aug '17: 1.06%
  • Aug '18: 2.06% (10-Year High)

With the Fed hiking 7 times already over the past two years, it's no surprise that the probability of an 8th Fed hike this coming September (from the current 1.75-2% to 2-2.25%) has moved to 96%, i.e. a certainty

Benchmark Rates of Central Banks Across the Globe

Philippines hikes rates for the 3rd time this year, in a +50 bps move to 4%, as inflation hits its highest level in 5 years.

Following many years of cuts-only, the global picture is now much more balanced with more central banks "daring" to hike. Nevertheless, there are still more banks that cut (on their last move) versus those that started to hike.


With the US reimposing sanctions over Russia, it's no surprise that the latest victim in the emerging markets' currencies arena is the Russian ruble

Emerging markets built imbalances counting on a weak dollar and eternal low rates and now the "sudden stop" domino is evident:

First it was the Argentinean peso...

Second was the Turkish lira...

Then joined the Brazilian real...

Followed by the Chinese yuan...

...and now it's the Russian ruble's turn:

Emerging Markets Currencies - MTD Performance

The Turkish lira ("TRY") and Russian ruble ("RUB") remain the most vulnerable currencies in the current environment of trade wars and new (or old that are reinstated) US sanctions

Putting it differently, can you guess which countries have been sanctioned most recently by the US?

Let's not forget the Iranian real ("IRR") which is not on the list but it's in our mind...


Market Cap of Top 20 Crypto-Currencies

It's ain't a rosy picture in here...

The market-cap of top 20 crypto-currencies at the end of 2017 was $512B. Today it's only $201B; that means a loss of $311B or -61%. Ouch!

It's no wonder then that the YTD returns of crypto-currencies are - how to put it nicely - not topping the list of "best performing assets in 2018"...

Even bitcoin (BTC-USD), the darling of 2017, has been cut by more than half its value.


Last but not least: SPDR® Gold Shares (GLD). Frankly, there's nothing to see here!

Chart GLD data by YCharts

Trade wisely!

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.