<div class="entry-content">On Thursday, April 7, the US 10-year Treasury yield climbed to 2.66%, marking its highest level in more than three years. This persistent upward trend indicates that the benchmark rate may continue to rise. However, insights from CapitalSpectator.com’s fair-value model suggest that there might be some constraints on how quickly and how high this significant rate can rise.
<div class="entry-content">
<p>* What implications will Jackson's appointment to the Supreme Court <a href="https://www.politico.com/news/2022/04/07/ketanji-brown-jackson-supreme-court-impact-00023961">have</a> on the nation?<br/>* The UN has <a href="https://apnews.com/article/russia-ukraine-united-nations-general-assembly-voting-rights-united-nations-linda-thomas-greenfield-6b4f311e6099315aa4efc2d5772ab80e">suspended</a> Russia from its human rights committee<br/>* US consumer debt <a href="https://www.cnn.com/2022/04/07/economy/federal-reserve-consumer-debt-february/index.html">increased</a> in February<br/>* Rising mortgage rates are likely <a href="https://www.cnbc.com/2022/04/07/rising-mortgage-rates-cause-more-home-sellers-to-lower-asking-prices.html">to drive down</a> home asking prices<br/>* Covid-19 lockdowns in China are causing <a href="https://www.nytimes.com/2022/04/08/business/china-lockdowns-supply-chain.html">further supply chain disruptions</a><br/>* Global food prices <a href="https://www.fao.org/worldfoodsituation/foodpricesindex/en/">have reached an all-time high</a>, surging at their fastest monthly rate in 14 years<br/>* US jobless claims <a href="https://www.cnn.com/2022/04/07/economy/unemployment-benefits-coronavirus/index.html">fell</a> to 166,000 last week, the lowest figure since 1968<br/>* The 10-year Treasury yield continues its ascent, hitting 2.66%, the highest level in over three years:</p>
<div class="entry-content">
<p>In previous articles, I have explored alternatives to the traditional 60/40 stock-to-bond benchmark primarily using US securities. Now, let's delve into another perspective by considering a portfolio comprised of stocks and bonds from China.</p>
<div class="entry-content">
<p>* Ukraine <a href="https://apnews.com/article/russia-ukraine-zelenskyy-kyiv-europe-moscow-8bca2a7ed323eec21be80ccfde091496">has requested</a> NATO to provide additional weapons as Russia prepares for new offensives<br/>* Treasury Secretary <a href="https://www.cnn.com/2022/04/06/economy/treasury-yellen-economic-impact-ukraine/index.html">warned</a> of 'significant' economic consequences resulting from the conflict in Ukraine<br/>* China <a href="https://www.reuters.com/world/china/china-warns-strong-measures-if-us-speaker-pelosi-visits-taiwan-2022-04-07/">has cautioned</a> the US against a possible visit by House Speaker Pelosi to Taiwan<br/>* Federal Reserve officials have indicated plans for a balance sheet reduction soon, as <a href="https://www.cnbc.com/2022/04/06/fed-minutes-march-2022-meetings-.html">reported in the minutes</a><br/>* Fed funds futures are <a href="https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html">reflecting</a> significant probabilities for a 50-basis-point rate increase<br/>* Leaders from major oil companies say there is <a href="https://www.bbc.com/news/business-61013908">no quick resolution</a> to the current oil shortage<br/>* The Senate <a href="https://thehill.com/news/senate/3261281-senate-to-confirm-ketanji-brown-jackson-to-supreme-court-thursday/">is expected</a> to confirm Jackson to the Supreme Court today<br/>* Russia <a href="https://qz.com/2151631/will-russia-default-on-its-bond-payments/">seems</a> to be on the verge of defaulting on its debt after converting payments to roubles<br/>* Global economic activity <a href="https://www.markiteconomics.com/Public/Home/PressRelease/0bc262035424466a98f209c3a7e9ddae">slowed</a> in March, according to the Composite PMI, a GDP proxy:</p>
<div class="entry-content">The US stock market continues to face challenges; however, it is not yet clear that a prolonged decline is on the horizon. Despite this uncertainty, maintaining a cautious approach may be prudent. The ongoing conflict in Ukraine and the uncertainties it creates bring significant risk, while high inflation and a more assertive Federal Reserve complicate the outlook further.
<div class="entry-content">
<p>* Russian forces are intensifying their attacks on Ukrainian cities as the West prepares additional sanctions <a href="https://www.reuters.com/world/europe/us-allies-ready-new-russia-sanctions-after-bucha-killings-2022-04-06/">against Russia</a><br/>* Treasury Secretary Yellen is <a href="https://www.nytimes.com/2022/04/05/business/yellen-russia-ukraine-sanctions.html">set to warn</a> about potential economic repercussions from the Ukraine conflict<br/>* Germany is considering ways to reduce its reliance on Russian gas, but <a href="https://www.nytimes.com/2022/04/06/world/europe/germany-gas-russia-ukraine.html">the challenge remains significant</a><br/>* Federal Reserve’s Brainard has indicated that a 'rapid' reduction of the balance sheet could commence soon <a href="https://www.cnbc.com/2022/04/05/feds-brainard-sees-balance-sheet-reduction-soon-and-at-a-rapid-pace.html">according to reports</a><br/>* The 30-year fixed mortgage rate <a href="https://www.cnbc.com/2022/04/05/30-year-fixed-mortgage-crosses-5percent-for-the-first-time-since-2013.html">exceeded 5%</a> for the first time since 2011<br/>* China's services sector witnessed a marked decline in activity in March, as shown by the <a href="https://www.markiteconomics.com/Public/Home/PressRelease/09b09925c4cb48729fee87864098f1e2">PMI survey</a><br/>* The Atlanta Fed's GDPNow model indicates that US Q1 GDP growth outlook <a href="https://www.atlantafed.org/cqer/research/gdpnow">remains subdued</a><br/>* The US services sector experienced <a href="https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/march/">growth in March</a>, as reported by the ISM Services Index:</p>
<div class="entry-content">Recent recession forecasts have gained attention, especially after the Treasury yield curve for 2- and 10-year rates became inverted. Nevertheless, some economists highlight the robustness of the labor market as a key factor that may help sustain economic expansion.
<div class="entry-content">
<p>* The US has <a href="https://www.reuters.com/business/us-cracks-down-russian-debt-payments-latest-sovereign-payments-halted-2022-04-05/">blocked</a> Russian government payments to its sovereign debt holders<br/>* The ongoing war in Ukraine <a href="https://www.wsj.com/articles/oil-gas-russia-renewable-energy-solar-wind-power-europe-11649086062">is accelerating</a> the transition to renewable energy amid increasing fossil fuel demand<br/>* Predictions of a recession are on the rise, yet the <a href="https://www.nytimes.com/2022/04/05/business/economy/recession-economy.html">economic landscape appears strong</a><br/>* The US jobs market is reportedly the tightest since World War II, according to <a href="https://www.bloomberg.com/news/articles/2022-04-04/goldman-gauge-shows-u-s-labor-market-tightest-in-postwar-era?srnd=economics-vp">Goldman Sachs</a><br/>* China's efforts to manage a surge in Covid-19 cases are primarily centered in Shanghai, where the situation is <a href="https://www.cnn.com/2022/04/04/china/shanghai-mass-testing-covid-lockdown-intl-hnk/index.html">continuing to evolve</a><br/>* Eurozone economic growth was reported as <a href="https://www.markiteconomics.com/Public/Home/PressRelease/b6cbfdaf2b804bc7b03537ec63c955b6">strong in March</a>, despite rising inflation<br/>* US factory orders <a href="https://www.reuters.com/article/usa-economy-manufacturing/u-s-factory-orders-fall-as-expected-in-february-idUSL2N2W212H">declined in February</a>, marking the first monthly decrease since April 2021:</p>
<div class="entry-content">The projected risk premium for the Global Market Index saw a slight increase in March, now at an annualized rate of 5.8%, marginally above the previous month’s estimate.
<div class="entry-content">
<p>* Reports of alleged war crimes by Russia have surfaced amid the ongoing conflict in Ukraine <a href="https://www.wsj.com/articles/ukrainians-count-dead-dig-mass-graves-clear-land-mines-after-russian-pullback-11648970003">as the situation evolves</a>.<br/>* JPMorgan’s CEO has indicated that inflation and the Ukraine conflict <a href="https://www.cnbc.com/2022/04/04/jamie-dimon-says-inflation-ukraine-war-may-dramatically-increase-risks-for-us.html">significantly heighten risks</a> for the US economy<br/>* There are growing concerns over the reasons behind America's slowing population growth <a href="https://www.theatlantic.com/newsletters/archive/2022/03/american-population-growth-rate-slow/629392/">and its implications</a>.<br/>* Global manufacturing growth has <a href="https://ihsmarkit.com/research-analysis/pmi-at-18month-low-as-manufacturing-disrupted-by-ukraine-war-and-omicron-wave-Apr22.html">dipped</a> to an 18-month low in March according to PMI data<br/>* Fed funds futures reflect a high probability of a 50-basis-point rate hike anticipated in May <a href="https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html">moving forward</a>.<br/>* US payrolls continue to <a href="https://www.cnbc.com/2022/04/01/jobs-report-march-2022-.html">expand robustly</a> in March, showcasing resilience in the labor market.<br/>* The US 2-year/10-year Treasury yield curve has turned negative for the first time since 2019:</p>
