Albert Edwards: investors are facing the four horsemen of the apocalypse

The big four issues facing markets right now: a jump in US bond yields; an escalating trade war; weakening emerging-market currencies; and the battle in the eurozone over Italy’s budget plans.

Luigi Di Maio: Italy's deputy prime minister

Edwards has long been a bond bull he expects prices to keep rising and yields to keep falling, with the US eventually going the way of Japan, with long-term bond yields near 0%. So he was "most surprised" that the ten-year Treasury yield "managed to smash through its multi-decade downtrend" in recent weeks, helped by expectations of further interest-rate hikes from an increasingly aggressive-sounding Federal Reserve. Yet while the push above the 3.05% mark was a "highly significant technical breach", Edwards is sticking with his view that ten-year yields will fall into negative territory during the next recession. Don't be surprised, he says, if the current Treasury sell-off "loses energy".

Advertisement - Article continues below

Edwards also notes that hostility towards the European Union (EU) from within Italy is set to grow. Unlike the UK, where young people are more positive about the EU than older people, in Italy, the under-45s are more likely to vote to leave. "Time is one thing the pro-EU establishment does not have on its side in Italy."




Compound interest: the eighth wonder of the world

Setting up a pharmaceuticals trust in the mid-1990s taught Max King the power of compounding
26 May 2020
Investment strategy

Are you a permabear? Three red flags to watch out for

Contrarian investors are often seen as bearish because the market tends to go up over time. But if that bearishness goes too deep, you risk seriously …
26 May 2020
Investment gurus

Nouriel Roubini: lacklustre recovery followed by a depression

We may see a U-shaped recovery at first, but then will come the L-shaped depression, says Nouriel Roubini.
26 May 2020

In support of active fund management

We’re fans of passive investing here at MoneyWeek. But active fund management has its place too, says Merryn Somerset Webb.
25 May 2020

Most Popular

Investment strategy

How John Maynard Keynes learned the folly of market timing

In an extract from his book The Sceptical Investor, John Stepek explains how the great economist John Maynard Keynes came a cropper when he first star…
25 May 2020
Emerging markets

A new lease of life for the Brics

Emerging markets are having a surprisingly good crisis. Their long-predicted rise will now continue.
24 May 2020

Battling volatility: The benefits of an active manager

SPONSORED CONTENT – Alastair Wilson, managing director of Close Brothers, on the advantages of active investing in times of crisis.
21 May 2020