by Tyler Durden
Sunday, Apr 11, 2021 - 08:10 PM
Summarizing investor sentiment in his Weekly Kickstart note, Goldman's David Kostin writes that three macro issues dominated investor discussions about the US equity market since the start of the year:
rates, inflation, and taxes.
Not surprisingly, interest rates have been the most important of these topics. In a rising interest rate environment, short duration outperforms long duration in both fixed income and equities and sure enough, of all Goldman thematic baskets, duration has been the best long-short trade, posting a +25% return since the start of 2021
A sector-neutral portfolio of short duration stocks (GSTHSDUR) has climbed by +24% YTD compared with a -1% return for a long duration portfolio (GSTHLDUR). As Exhibit 1 shows, duration has been a major contributor to alpha generation.