📊The Impact of Bond Market on Macro Traders in 2023

Delve into the tumultuous first half of 2023 and see how macro traders and market cycle investors have weathered the storms

#keypoints

• Daily Educational Content [Free]:

  • The Impact of Bond Market on Macro Traders in 2023

    • Steering Through Storms: Macro Traders Amid Market Turbulence

    • Betting Big and Facing the Consequences

    • Profiting from the Pandemonium

    • Navigating the Market Cycle

    • The Bond Market

• Case Study [Free]:

  • In what time of the Bond Market Cycle are we now?

• Bottom Line

---

• Wall Street Insider Report

• Market Cycle and Alfa Hedge Portfolio II Update [Premium]

The Impact of Bond Market on Macro Traders in 2023

Steering Through Storms: Macro Traders Amid Market Turbulence

In the grand chessboard of finance, macro traders are the knights, moving dynamically across the vast landscape of the world's markets.

In the first half of 2023, these agile players have been put to the test as they navigated the stormy seas of global finance.

See how macro traders and Market Cycle investors have weathered the storms.

The Rollercoaster Ride of Bonds

Macro traders, in their unending quest for advantageous positions, found the bond markets of 2023 to be a rollercoaster ride.

These weren't just minor market jitters; they were serious upheavals. Leading players such as Andrew Law's Caxton Macro hedge fund and Jeff Talpins's Element Capital Management found themselves on a downward trajectory, registering significant losses.

A Shaken Market: The Ripple Effect of the Silicon Valley Bank’s Demise

Just as one loose domino can trigger a cascading fall, the collapse of the Silicon Valley Bank in March shook the financial world, leaving its echo on the trading books of many macro traders.

Despite making some recovery in June, the effect of this blow was still visible on the balance sheets of players like Said Haidar and billionaire Chris Rokos.

Betting Big and Facing the Consequences

Being a macro trader is like being a high-wire acrobat, balancing risks and rewards.

The SVB failure acted as a gust of wind, shaking the wire and sending many performers tumbling.

Market fluctuations in its aftermath dwarfed those from even the most notable financial crises of the past.

An Exodus: Investors Take Flight

Once investor confidence is shaken, it's tough to restore.

The tumultuous market conditions led to an investor exodus, with about $2 billion being pulled from macro traders in the first half of 2023.

The challenging market outlook makes regaining this lost trust a daunting task.

Struggles of the Titans

The Jolting Experience of Veteran Players

The first half of 2023 wasn't kind to seasoned macro traders either. Some, such as Adam Levinson, had to take extreme measures like shutting down their hedge funds. Others, like Brevan Howard Asset Management, had to sever ties with partner firms, in their case, Commonwealth Asset Management.

The Balancing Act of Assets and Risks

The tale of Element Capital Management, managed by Jeff Talpins, serves as a stark illustration of the challenges faced. With assets worth $12.6 billion in January, the fund faced the hard decision of encouraging investors to withdraw their money, all in a bid to shrink the asset size and maintain agility in the face of adverse conditions. It's a constant battle of balancing assets against risks.

Profiting from the Pandemonium

Despite the storm, some were able to find their silver lining. The secret: to adapt to what was really happening on the market and not trying to stay blinded by a investment thesis.

A handful of firms, including Discovery Capital Management, Kirkoswald hedge fund, and Melqart KEAL Macro, were able to sail through the stormy seas and find a path to profit.

This is where a dynamic Market Cycle approach win.

Navigating the Market Cycle

With the market cycle constantly evolving, it's crucial to understand the dynamics at play and adapt your investment strategies accordingly.

The market cycle refers to the recurring patterns and phases that the stock market undergoes over time.

These phases include the bull market, bear market, recovery, and consolidation. By understanding these market phases, investors can gain insights into potential investment opportunities and adjust their strategies accordingly.

The Market Cycle Investor Advantage

The flexibility, inherent risk management, and ability to improve skewness make them a powerful strategy for navigating all market conditions.

Understand more reading this article.

The Bond Market

The bond market is primarily influenced by interest rates.

When interest rates rise, bond prices fall, and vice versa.

This is because as interest rates increase, newly issued bonds become more attractive (since they offer higher yields), causing the prices of existing bonds to fall.

But what led Macro Traders to struggle was the other factors that influence the bond market, as inflation expectations, economic growth, and credit ratings of issuers.

As seen on the graph below, during 2022, the Bond and Stock Market (represented by the SPY 0.00%↑ ETF (blue line) and TLT 0.00%↑ ETF (orange line) was correlated in a downtrend.

SPY ETF (blue line) and TLT ETF (orange line)

This was a unique period and caught those who kept attached to the past history and don’t observe (and adapted to what was happening on the market).

📈Case Study: In what time of the Bond Market Cycle are we now?

The Alfa Hedge Rating was developed by Zurique Capital, to identify the Market Cycles (through ETFs) combining:

• highest historical positive volatility (highest probability of Long-Term uptrends), with this data we analyze the past.

• highest expectancy ratio, with this data we analyze what to expect in the future based on statistics (not astrology or opinions).

• Market Cycle Phase, with this data we analyze the present situation of the Market.

So, let’s take a look of the Bond Market on the Week 28/23 (we update this analysis every week on this link).

For this analysis we track the most negotiated ETFs of the Bond Market:

BND -0.30%↓ : This popular ETF offers exposure to entire investment grade bond market in a single ticker, with holdings in T-Bills, corporates, MBS, and agency bonds.

AGG -0.30%↓: This ETF offers broad-based exposure to investment grade U.S. bonds, making AGG a building block for any investor constructing a balanced long-term portfolio as well as a potentially attractive safe haven for investors pulling money out of equity markets.

BNDX -0.08%↓ : BNDX offers broad market-like exposure to investment-grade bonds denominated in foreign currencies, hedged against currency fluctuations for US investors. A majority of the fund`s investments are in sovereign bonds with AA rating or better.

VCIT -0.40%↓ : VCIT offers exposure to investment grade corporate bonds that fall in the middle of the maturity spectrum, thereby delivering a moderate amount of both interest rate and credit risk.

TLT -0.40%↓ : This ETF is one of the most popular options for investors seeking to establish exposure to long-dated Treasuries, an asset class that is light on credit risk but may offer attractive yields thanks to an extended duration and therefore material interest rate risk.

Source: https://etfdb.com/etfs/

All the most negotiated Bond ETFs AGG -0.30%↓ , BND -0.30%↓ , TLT -0.40%↓ BNDX -0.08%↓ and VCIT -0.40%↓ on Negative Cycle.

Because of the general condition of the Bond Market, we don’t have Bond Market positions on Alfa Hedge Portfolio II now. This way we protect our capital from a bear phase.

Know more about Market Cycle Investing on this link.

In what time of the Market Cycle are we now?

It depends on what market. Bonds? Stocks?

Every business day we update the evolution of the Alfa Hedge Portfolio II.

Premium Subscribers have full access to our Alfa Hedge Portfolio II in a Real-Life Brokerage Account in Real Time.

Bottom Line

Macro traders are well-acquainted with market volatility, understanding that calm seas often follow stormy weather.

Despite a rough first half, the key is look to the future with resilience and adaptability.

---

If you liked this content, you will love the others contents of our Report.👇

Wall Street Insider Report

Demystify the MARKET CYCLES investing SMARTER in Wall Street

Theory + Action: Learn & Replicate a High Performance + Low Maintenance + Long-Term Portfolio

Join +13k Global Investors and Really Master the Market Cycle Investing

---

Disclaimer:

The publisher does not guarantee the accuracy or completeness of the information provided in this page.

All statements and expressions herein are the sole opinion of the author.

The Zurique Capital is a publisher of financial information, not an investment advisor.

We do not provide personalized or individualized investment advice or information that is tailored to the needs of any particular recipient.

THE INFORMATION CONTAINED ON THIS WEBSITE IS NOT AND SHOULD NOT BE CONSTRUED AS INVESTMENT ADVICE, AND DOES NOT PURPORT TO BE AND DOES NOT EXPRESS ANY OPINION AS TO THE PRICE AT WHICH THE SECURITIES OF ANY COMPANY MAY TRADE AT ANY TIME.

THE INFORMATION AND OPINIONS PROVIDED HEREIN SHOULD NOT BE TAKEN AS SPECIFIC ADVICE ON THE MERITS OF ANY INVESTMENT DECISION.

INVESTORS SHOULD MAKE THEIR OWN INVESTIGATION AND DECISIONS REGARDING THE PROSPECTS OF ANY COMPANY DISCUSSED HEREIN BASED ON SUCH INVESTORS’ OWN REVIEW OF PUBLICLY AVAILABLE INFORMATION AND SHOULD NOT RELY ON THE INFORMATION CONTAINED HEREIN.

No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned.

Any projections, market outlooks or estimates herein are forward looking statements and are inherently unreliable.

They are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur.

Other events that were not taken into account may occur and may significantly affect the returns or performance of the securities discussed herein.

The information provided herein is based on matters as they exist as of the date of preparation and not as of any future date, and the publisher undertakes no obligation to correct, update or revise the information in this document or to otherwise provide any additional material.

The publisher, its affiliates, and clients of the a publisher or its affiliates may currently have long or short positions in the securities of the companies mentioned herein, or may have such a position in the future (and therefore may profit from fluctuations in the trading price of the securities).

To the extent such persons do have such positions, there is no guarantee that such persons will maintain such positions.

Neither the publisher nor any of its affiliates accepts any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of the information contained herein.

By using the Site or any affiliated social media account, you are indicating your consent and agreement to this disclaimer and our terms of use.

Unauthorized reproduction of this newsletter or its contents by photocopy, facsimile or any other means is illegal and punishable by law.

For Full Terms of Use Click HERE. For the Privacy Policy Click HERE.

wallstreetinsiderreport.com (“Zurique Capital”) is a website owned and operated by Substack.

By accessing this website or any page thereof, you agree to be bound by the Terms of Use and Privacy Policy, in effect at the time you access this website or any page thereof.

The Terms of Use and Privacy Policy may be amended from time to time. Nothing on this website shall constitute an offer to sell, or a solicitation of an offer to buy or subscribe for, any securities to any person in any jurisdiction where such an offer or solicitation is against the law or to anyone to whom it is unlawful to make such offer or solicitation.

“Zurique Capital” is not an underwriter, broker-dealer, Title III crowdfunding portal or a valuation service and does not engage in any activities requiring any such registration.

“Zurique Capital” does not provide advice on investments or structure transactions.

Offerings made under Regulation A under the U.S. Securities Act of 1933, as amended (the "Securities Act") are available to U.S. investors who are “accredited investors” as defined by Rule 501 of Regulation D under the Securities Act well as non-accredited investors, who are subject to certain investment limitations as set forth in Regulation A under the Securities Act.

In order to invest in Regulation A offerings, investors may be asked to fill out a certification and provide necessary documentation as proof of your income and/or net worth to verify that you are qualified to invest in offerings posted on this website.

All securities listed on this site are being offered by, and all information included on this site is the responsibility of, the applicable issuer of such securities.

“Zurique Capital” does not verify the adequacy, accuracy or completeness of any information.

Neither “Zurique Capital” nor any of its officers, directors, agents and employees makes any warranty, express or implied, of any kind whatsoever related to the adequacy, accuracy, valuations of securities or completeness of any information on this site or the use of information on this site.

Neither “Zurique Capital” nor any of its directors, officers, employees, representatives, affiliates or agents shall have any liability whatsoever arising from any error or incompleteness of fact, or lack of care in the preparation of, any of the materials posted on this website.

Investing in securities, especially those issued by start-up companies, involves substantial risk. investors should be able to bear the loss of their entire investment and should make their own determination of whether or not to make any investment based on their own independent evaluation and analysis.