Will Bond Vigilantes end the Equity Bull Market?

📊 The Art of Investing Survey – Fill in the form here, we’d love your feedback: https://forms.office.com/e/tCyxzN48Ks 📈 Download the full Portfolio Performance Slides View the portfolio breakdown: https://drive.google.com/file/d/188yTo0xYPvZMi57qx4UgipdyFZocFCrT/view?usp=sharing 📧 Get in touch: [email protected] 📱 Behind the scenes: @_theartofinvesting on TikTok 🎧 Apple: https://podcasts.apple.com/gb/podcast/the-art-of-investing/id1825201965 🎧 Spotify: https://open.spotify.com/show/4bmvfbDz2kniwxCL66sVjH This week on The Art of Investing, attention turns to the bond market as rising real yields begin to create a new challenge for investors. Chris breaks down what real yields actually are, why they are moving higher and how increasingly attractive returns from government bonds could eventually start competing with equities for investors’ capital. The team also unpack the US Treasury’s latest intervention in the bond market, likening the move to a modern-day “Operation Twist”, and debate whether policymakers can successfully push down longer-term yields when borrowing demand remains so high. Alongside the bond discussion, Mark reviews a busy week across markets, from a weaker US dollar and a rebound in Bitcoin and Ethereum to Moderna’s extraordinary rally. The team also answer listener questions on whether it’s too late to start following the portfolio, how they use moving averages to inform investment decisions, and the role currency hedging can play when investing overseas. This Week’s Highlights: 💰 Why Real Yields Matter Chris explains the difference between nominal and inflation-linked bonds, and why rising real yields could become increasingly important for equities and other risk assets. 🔄 Operation Twist Returns The team unpack the US Treasury’s plan to increase long-term bond buybacks while issuing more short-dated debt, and why they believe the intervention matters for markets. 🏦 The Competition for Capital With governments and major technology companies borrowing heavily, the team discuss why growing demand for capital is pushing yields higher and creating a more challenging backdrop for investors. 📉 When Do Bonds Become Too Attractive to Ignore? Chris considers the level at which higher risk-free returns could encourage investors to reduce equity exposure and start allocating more heavily towards bonds. 📊 How the Team Decide When to Buy and Sell Responding to a listener question, Mark and Chris explain how moving averages can help identify when markets are becoming stretched and provide a less emotional view of price action. 💷 Should Investors Hedge Currency Risk? The team explore the impact exchange rates can have on overseas investments and why sterling investors may choose between hedged and unhedged funds. Portfolio Snapshot - Week 53: 📊 Weekly portfolio performance: -1.1% 📈 Total return since inception: +24.9% 📅 2026 year-to-date return: +12.4% Top Performers: 📈 BlackRock World Mining Trust PLC: +1.0% 📈 iShares Russell 2000 ETF: +0.1% 📈 Cash: +0.1% Underperformers: 📉 iShares Nikkei 225 ETF: -3.7% 📉 WisdomTree Copper ETF: -2.9% 📉 XLI SPDR US Industrials ETF: -1.8% Portfolio Changes: No portfolio changes this week. Despite weakness across several holdings, diversification helped limit the overall portfolio decline to 1.1%, with the team maintaining their existing positioning as they begin the second year of the portfolio. Big Questions This Week: - Could rising real yields eventually pull meaningful capital away from equities? - Why is the US Treasury intervening in the long end of the bond market? - Can policymakers successfully fight the direction of the bond market? - Is it too late for investors to start following the model portfolio after its strong first year? - Which indicators can investors use to help decide when to buy and sell? - Should UK investors hedge the currency exposure in their overseas investments? What You’ll Learn: ✔️ What real yields are and why they matter for investment markets ✔️ How rising government bond yields can affect equity valuations ✔️ Why the latest US Treasury bond buybacks are different from quantitative easing ✔️ How moving averages can be used as part of an investment decision-making process ✔️ What to consider when choosing between hedged and unhedged overseas funds ✔️ Why the team are becoming more cautious as markets head towards September and October Disclaimer: This podcast is provided for educational and informational purposes only. The content presented is not intended as personal investment advice or a recommendation to buy, sell, or hold any particular securities or investments. All discussions regarding the model portfolio are illustrative and for educational purposes. Your capital is at risk. The value of shares, ETFs and ETCs can fall as well as rise, which could mean getting back less than you originally put in.