{"id":23031,"date":"2021-02-28T14:24:41","date_gmt":"2021-02-28T19:24:41","guid":{"rendered":"https:\/\/capital10x.com\/old\/?p=23031"},"modified":"2021-02-28T22:20:35","modified_gmt":"2021-03-01T03:20:35","slug":"bonds-spook-market-commodities-hang-tough","status":"publish","type":"post","link":"https:\/\/capital10x.com\/old\/bonds-spook-market-commodities-hang-tough\/","title":{"rendered":"Markets & Metals Navigator: Bonds Spook the Market + Commodities Hang Tough"},"content":{"rendered":"

Bond Vigilantes are Back<\/h2>\n

US bond investors took control of the market last week, as 10 year treasury yields spiked to 1.5% reaching pre-pandemic levels.<\/p>\n

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What has spooked the global markets is the rate of change of bond yields in 2021, a phenomenon that is global in nature. The global demand for higher yields is driven by higher inflation expectations.<\/p>\n

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Commodities Hang Tough vs. High Valuation Tech Stocks<\/h2>\n

The bond market volatility sent equity markets markedly lower last week, the S&P 500 was down -2.4% and the Nasdaq down -4.9%.<\/p>\n

However during the volatile week the CRB Commodity Index was up 1%, while the tech heavy (and high valuation multiple) Ark Innovation ETF was down 15%.<\/p>\n

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J.P. Morgan highlighted last week that there are ample drivers in place for the start of a new commodity super cycle. Key drivers include: ultra loose global monetary policies, financial measures directed towards infrastructure, investment for metals for new green infrastructure (EVs, batteries) and the reopening of economies post-COVID-19.<\/p>\n

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Tavi Costa from Crescat Capital highlighted on Twitter<\/a> that US private investment in mining exploration is at the lowest level since the last peak of the commodity bubble in 1983.<\/p>\n

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Bitcoin, Gold and Silver<\/h3>\n

While inflation was the cause of fear for the bond market, the ‘store of wealth\/ insurance’ assets (bitcoin, gold and silver) had sold off as well (not the desired outcome).<\/p>\n

While gold and silver sold-off inline with the S&P500, Bitcoin was bludgeoned – down -17% last week. It highlights two key points for investors: 1. Bitcoin as an asset is still very young and carries significant associated volatility. 2. There’s a high tech market beta associated with Bitcoin, a high correlation with selloffs in high flying tech (Ark & Tesla).<\/p>\n

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Tesla Potentially Shifting to Iron Phosphate Batteries Over Nickel Supply Concerns<\/h2>\n

Last Thursday Elon Musk stated on twitter that Nickel was one of the biggest concerns for Tesla to scale lithium-ion cell production, that is why Tesla is shifting to an iron cathode.<\/p>\n

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Nickel is our biggest concern for scaling lithium-ion cell production. That\u2019s why we are shifting standard range cars to an iron cathode. Plenty of iron (and lithium)!<\/p>\n

— Elon Musk (@elonmusk) February 25, 2021<\/a><\/p><\/blockquote>\n