Risk Parity and the Terminal Rate

In this piece Cam Hui of the Pennock Idea Hub in Canada has considered the effects of Risk-Parity funds on the bond market. Using three different analytical techniques, he concludes that Risk-Parity strategies did not exacerbate the downturn in bond prices. In the second part of the report he looks to see if the bond market is repricing the terminal rate or, if the inflation breakeven is just normalizing. While both factors are at work, Hui attributes most of the rise in nominal rates to inflation breakeven normalization. Click below to contact the provider directly to request trial access or access to this particular piece.