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ALTERNATIVE MARKETS UPDATE - END FEBRUARY 2023

3/3/2023

 
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​With inflation remaining high, rates are trading higher than at the beginning of the year. While the view for 2023 is still largely pessimistic, in January the view shifted to more optimism, when most assets posted strong gains. However, this optimism faded to some degree again in February 2023. With inflation only going down slowly, more and more market participants expect rate cuts later than previously expected. This stance is also further supported by the central banks, especially by the Fed and ECB recently. In the US, this led to a substantial rise in longer maturity yields. Nonetheless, the yield curve inversion is still severe. Over the past weeks, yields on 6m- and 1Y-Treasuries have surpassed the 5%, whereas the 10Y-Treasuries are close to the 4% mark. The current yields also are also alarming for the real estate market that now sees a crisis ahead. House prices plummeted since 2020. At least, the impact is not that large as it has been during the global financial crisis, but it could still reach those levels with more time. The now high mortgage rates lead to a strong decrease in home construction. The last time it was this low was back in 1995. The particularly alarming thing is that this is despite the already strongly decreasing house prices. With rates unlikely to go down substantially any time soon, the industry is under significant pressure, which is likely to persist for a while. While the decreasing house prices are substantial, compared to its history, this decline is very small. Since the global financial crisis, the median house price in the US has doubled. In this context, the affordability of housing and in particular construction is at a very low level. 
*|MC_PREVIEW_TEXT|*
RESEARCH PERSPECTIVE VOL. 198
February 2023
Alternative Markets February 2023
With inflation remaining high, rates are trading higher than at the beginning of the year. While the view for 2023 is still largely pessimistic, in January the view shifted to more optimism, when most assets posted strong gains. However, this optimism faded to some degree again in February 2023. With inflation only going down slowly, more and more market participants expect rate cuts later than previously expected. This stance is also further supported by the central banks, especially by the Fed and ECB recently. In the US, this led to a substantial rise in longer maturity yields. Nonetheless, the yield curve inversion is still severe. Over the past weeks, yields on 6m- and 1Y-Treasuries have surpassed the 5%, whereas the 10Y-Treasuries are close to the 4% mark. The current yields also are also alarming for the real estate market that now sees a crisis ahead. House prices plummeted since 2020. At least, the impact is not that large as it has been during the global financial crisis, but it could still reach those levels with more time. The now high mortgage rates lead to a strong decrease in home construction. The last time it was this low was back in 1995. The particularly alarming thing is that this is despite the already strongly decreasing house prices. With rates unlikely to go down substantially any time soon, the industry is under significant pressure, which is likely to persist for a while. While the decreasing house prices are substantial, compared to its history, this decline is very small. Since the global financial crisis, the median house price in the US has doubled. In this context, the affordability of housing and in particular construction is at a very low level.
STONE MOUNTAIN CAPITAL
Stone Mountain Capital is an advisory boutique established in 2012 and headquartered in London with offices Pfaeffikon in Switzerland, Dubai and Umm Al Quwain in United Arab Emirates. We are advising 30+ best in class single hedge fund and multi-strategy managers across equity, credit, and tactical trading (global macro, CTAs and volatility). In private assets, we advise 10+ sponsors and general partners across private equity, venture capital, private credit, real estate, capital relief trades (CRT) by structuring funding vehicles, rating advisory and private placements. As of 1st April 2022, Stone Mountain Capital has total alternative Assets under Advisory (AuA) of US$ 60.5 billion. US$ 43.9 billion is mandated in hedge funds and US$ 16.6 billion in private assets and corporate finance (private equity, venture capital, private debt, real estate, fintech). Stone Mountain Capital has arranged new capital commitments of US$ 1.77 billion across hedge fund, private asset and corporate finance mandates and has been awarded over 75 industry awards for research, structuring and placement of alternative investments. As a socially responsible group, Stone Mountain Capital is a signatory to the UN Principles for Responsible Investing (PRI). Stone Mountain Capital applies Socially Responsible Investment (SRI) filters to all off its alternative investment strategies and general partners on behalf of investors. 
 
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© 2023 Stone Mountain Capital LTD. All rights reserved.
  • About
    • Partners
    • Ventures
  • Team
    • Oliver Fochler
    • Ashvin Chotai
    • Pascal Hasler
    • Alexander Rothlin
    • Claudio Calonder
    • Joaquin Abos
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