- Long-term rates have been skyrocketing and the Treasury bond market crashing.
- Investors should pay attention to the bond market crash because it may proceed to another crash in risk assets such as stocks, preferred equities, and junk bonds.
- Due to their convexity, preferred equities can decline substantially given an increase in inflation and long-term interest rates.
- Preferred equity ETFs such as PGX carry immense exposure to banks which are particularly exposed to the ongoing situation due to their high leverage and Treasury assets.
For further details see:
PGX: Rising Rates Are Bad News For Preferred Equities