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Daily Archives: 26th November 2020

26th November 2020

💷 HY Strategy: 20.2% Returns Since April

Market Overview

We are into the home straight for 2020, but one can be forgiven for thinking that the roller-coaster ride might still have a few twists and turns to come yet. As it stands, markets have staged the most incredible of recoveries. There has been much hope littered with periods of fear. Everything has been smoothed over by lashings of central bank liquidity and more recently, the coronavirus vaccine news.

Risk market prices had hit rock bottom back in that early March/April period, but without quite falling out of bed. But we go into the final weeks of the year with the US markets at or around record highs. European markets are at or around being in the black for the year.

Rates have remained better bid throughout. Credit spreads in IG are remarkably flat year to date and we are in positive territory in total return terms in IG and HY (iBoxx index).

(Bit) coining it in

The stand-out market though is a non-standard market. It’s the crypto sphere – and Bitcoin in particular. Given huge credibility afforded by Paypal’s most recent participation in the crypto currency, we have seen a remarkable – almost exponential, rise in Bitcoin’s price. It’s not for the faint-hearted, though.

Its price has taken a hammering in Thursday’s session, losing 10% (or $2k per coin) in what is probably a correction, but is still higher by 300% since March, generating option-like returns for investors. Now it’s at around $17,000 USD a coin and some forecasts have it pitched up at more than $100,000 a coin by the end of 2021.

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