📊Unexpected Inflation Spike
A January Alarm Bell for Bond Market Stability. Know the impact in our Portfolio.
Unexpected Inflation Spike
A January Alarm Bell for Bond Market Stability
The January CPI report indicating a hotter-than-expected inflation rate impacts the bond market significantly, as inflation directly influences bond yields and prices. The increase in "core" prices suggests persistent inflationary pressures, potentially leading to higher interest rates, which negatively affects bond prices.
Alpha Hedge Bond Portfolio
Understanding the Alpha Hedge Bond Portfolio
This portfolio combines 1 Alpha Asset during increasing Rates or 1 Hedge Asset during Rates downtrend.
In February, the Bond Portfolio represents 15% of the Alpha Hedge Portfolio.
Performance of the Alpha Hedge Bond Portfolio
The Rates are in Phase 6 (Denial/Decline Phase), so an Hedge position was established in December 2023. In this Hedge Cycle, up until February 9, 2024, it returned 1.36%*, and 310.92% since 2013. The benchmark for this portfolio is the TLT 0.00%↑ ETF, which decreased -14,54% in the same period**.
How the Unexpected Inflation Spike Affected the Alpha Hedge Bond Portfolio
Our portfolio experienced a decline of 3.1% on Tuesday, with the bond, equity, and growth markets falling. However, the crypto market was resilient. On Wednesday, this decline was partially recovered, maintaining a positive performance in February.
*To ensure confidence in the presented results, our Premium Subscribers can follow the Alpha Hedge Portfolio in Real Time, from a Real-Life Brokerage Account.
** This was achieved without any new contributions or withdrawals, with profits and dividends excluded throughout the period.
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Hi Dan. Just for me to be clear, the hedge is TMF which is supposed to see price increases as rates go down (longer terms treasuries) while the Alpha is TTT which shorts those treasuries meaning price should move up as rates also go up. Correct?