# Move over TINA, it’s time for TARA Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-01-11 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: TINA is out, make way for TARA: Financial market shakeout Meta Description: Explore how the abrupt shift from low interest rates is reshaping investment strategies globally and uncover the rising alternatives to equities. URL: https://financedigest.com/move-over-tina-its-time-for-tarahtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-01-11t070633z1lynxmpej0a06ertroptp4global-investing-tara-1737287297188-compressed.jpg) By Naomi Rovnick (Reuters) – A shakeout in financial markets triggered by central banks’ sudden move to abandon ultra-low interest rates has created a casualty money managers will not miss: TINA. The acronym for There Is No Alternative to owning equities described how loose monetary policy since 2009 put stocks on steroids because yields on fixed income products such as government bonds became too low to bother with. TINA was the only trade in town. But as high inflation has forced major central [banks to increase the cost of money](https://www.financedigest.com/marketmind-banks-are-leaking-money.html "Marketmind: Banks are leaking money"), TINA’s reign is over, leaving trillions of dollars worth of investments looking for a new home as investors adjust to a new, more varied, era. “There is now TARA,” said Andrew Balls, chief executive of fixed income at PIMCO. “There is a reasonable alternative.” Graphic: [TINA is making way for TARA](https://www.financedigest.com/move-over-tina-its-time-for-tara-2.html "Move over TINA, it’s time for TARA") https://www.reuters.com/graphics/GLOBAL-INVESTING/TARA/byprlrlkgpe/chart.png Idanna Appio, a portfolio manager at First Eagle Investments, said that TINA was good for passive [investors as it meant that equity prices went up because bond](https://www.financedigest.com/investors-seek-higher-returns-as-catastrophe-bond-issuance-slows-during-q2-according-to-aon-study.html "INVESTORS SEEK HIGHER RETURNS AS CATASTROPHE BOND ISSUANCE SLOWS DURING Q2, ACCORDING TO AON STUDY") yields went down. In 2022, both [stocks and bonds were hit by high inflation](https://www.financedigest.com/stocks-and-gold-cheer-u-s-inflation-picture-while-dollar-slides.html "Stocks and gold cheer U.S. inflation picture, while dollar slides") and rising rates. This year will be choppy,” she said, with a “volatile macro-economic landscape” and “confusion” over interest [rates and inflation](https://www.financedigest.com/german-inflation-rate-to-ease-over-course-of-2023-econ-minister.html "German inflation rate to ease over course of 2023 – econ minister"). “But certainly a broad, passive exposure to stocks is not going to be the winning approach.” MAKE WAY TINA’s strength peaked during the 2020 COVID [crisis as global central banks](https://www.financedigest.com/how-the-2023-banking-crisis-unfolded.html "How the 2023 banking crisis unfolded") ramped up stimulus and snapped up government bonds. By late 2020, $18.4 trillion worth of this low-risk debt carried a negative yield, meaning [anyone holding the bonds to maturity lost money](https://www.financedigest.com/more-than-one-in-ten-brits-are-embarrassed-to-talk-to-anyone-about-their-money-issues.html "More than one in ten Brits are embarrassed to talk to anyone about their money issues"). But now, yields on government bonds have finally [turned positive](https://www.financedigest.com/uk-retailers-turn-positive-on-sales-hopes-after-bleak-winter.html "UK retailers turn positive on sales hopes after bleak winter"), adding to pressure on stocks but removing one major drawback of holding fixed income. Quantitative easing and zero interest rates are definitively behind us,” said David Dowsett, [global head](https://www.financedigest.com/new-york-catches-up-with-london-to-head-citys-global-centres-survey.html "New York catches up with London to head City’s global centres survey") of investments at fund manager GAM. “The risk free rate,” he added, referring to core government bond yields, “actually gives you something.” In their biggest moves in decades, U.S. 10-year [Treasury yields](https://www.financedigest.com/wall-st-flutters-treasury-yields-ease-as-powell-resumes-testimony.html "Wall St flutters, Treasury yields ease as Powell resumes testimony") have more than doubled in the past year to around 3.6%. Germany’s Bund yield is at 2.28%, versus just below 0% a year ago. Bond funds [recorded net](https://www.financedigest.com/recruiter-hays-boosted-by-record-net-fees-but-cautious-on-outlook.html "Recruiter Hays boosted by record net fees, but cautious on outlook") inflows for six straight weeks until early January, BofA said, based on its analysis of EPFR data. A recession meanwhile could halt or shrink companies’ dividend payouts, but [businesses that remain solvent must continue to pay](https://www.financedigest.com/uks-sunak-to-halve-support-that-helps-businesses-pay-fuel-bills-the-times.html "UK’s Sunak to halve support that helps businesses pay fuel bills -The Times") coupons on their bonds. You can find [investment grade bonds on attractive yields that have just 18 months to maturity, meaning there’s only 18 months for something to go wrong, basically,” said Neil Birrell, chief investment officer at UK asset manager](https://www.financedigest.com/french-watchdog-fines-h2o-asset-management-executives-over-tennor-investments.html "French watchdog fines H2O Asset Management, executives over Tennor investments") Premier Miton. “You can at least bring money in from clipping the coupons.” An ICE BofA index of U.S. investment grade corporate bonds with one to three [years until their repayment date](https://www.financedigest.com/explainer-international-womens-day-date-history-and-this-years-theme.html "Explainer-International Women’s Day: date, history and this year’s theme") yields around 5.1%. GAM’s Dowsett said his [group’s multi-asset funds had an “overweight” position on shorter-dated investment grade credit](https://www.financedigest.com/telecoms-group-orange-signs-sustainability-linked-refinancing-of-6-billion-euros-syndicated-credit-facility.html "Telecoms group Orange signs sustainability-linked refinancing of 6 billion euros syndicated credit facility"). Graphic: [Corporate bonds](https://www.financedigest.com/green-bonds-are-set-to-drive-corporate-esg-debt-out-of-slump-in-2023-barclays.html "Green bonds are set to drive corporate ESG debt out of slump in 2023 -Barclays") winning back their appeal https://www.reuters.com/graphics/GLOBAL-INVESTING/TARA/klpygzggdpg/chart.png HEADWINDS TARA may become more popular with [investors but it’s not going to be smooth sailing, especially with bond investors’ old enemy — inflation — back](https://www.financedigest.com/glencore-courts-120-teck-investors-for-bid-backing-as-spinoff-vote-looms-source.html "Glencore courts 120 Teck investors for bid backing as spinoff vote looms -source"). Inflation rocketed to 40-year highs in the United States and [Europe last year and central banks responded with the sharpest rate rises](https://www.financedigest.com/analysis-rate-rises-pile-pain-on-sme-firms-in-u-s-and-europe.html "Analysis-Rate rises pile pain on SME firms in U.S. and Europe") in decades. [Price pressures are now abating and data on Thursday is expected to show annual](https://www.financedigest.com/coca-cola-hbcs-annual-profit-beats-warns-of-price-increases.html "Coca-Cola HBC’s annual profit beats, warns of price increases") U.S. [inflation at 6.5% in December](https://www.financedigest.com/spains-12-month-inflation-slows-down-again-in-december-to-5-8.html "Spain’s 12-month inflation slows down again in December to 5.8%"), down from as high as 9.1% last June. [Bank of America expects 10-year Treasury yields to decline to 3.25% by end-2023 as government debt prices rise](https://www.financedigest.com/sterling-rises-as-receding-bank-sector-worries-lift-sentiment.html "Sterling rises as receding bank sector worries lift sentiment"), in turn lifting other fixed income assets. The outlook for bonds is more positive but it’s not immediate,” said Baylee Wakefield, multi-asset portfolio manager at Aviva Investments, who is no longer [selling bonds short but also not increasing](https://www.financedigest.com/taylor-wimpey-espana-remain-cautiously-optimistic-as-average-selling-price-increases-by-20-4.html "Taylor Wimpey España ‘remain cautiously optimistic’ as average selling price increases by 20.4%") her exposure. We might be a [way off the trade making money](https://www.financedigest.com/best-ways-to-make-money-online.html "Best ways to make money online") if we aren’t yet at the peak of interest rates and inflation. A traditional view of fixed income [investments outperforming during economic](https://www.financedigest.com/the-politics-economics-and-investment-implications-of-brexit.html "The politics, economics and investment implications of Brexit") downturns is complicated by the most likely causes of a recession being persistent inflation and high borrowing costs. U.S. and European central [banks are steadfastly discouraging talk that the inflation](https://www.financedigest.com/be-really-really-careful-on-inflation-bank-of-englands-haskel.html "Be ‘really, really careful’ on inflation – Bank of England’s Haskel") fight is over. The end of TINA is very important,” said Francesco Sandrini, head of multi-asset strategies at Amundi, [Europe’s largest](https://www.financedigest.com/uk-card-fraud-losses-climbed-18-percent-in-2015-largest-rise-in-europe.html "UK CARD FRAUD LOSSES CLIMBED 18 PERCENT IN 2015, LARGEST RISE IN EUROPE") fund manager. “But the idea that bonds are back is a bit of a simplification.” TINA has had its day, though. Strategists at UBS [see Wall Street’s benchmark S&P 500 stock market index dropping to about 3,200 this year](https://www.financedigest.com/10-year-david-goliath-crusade-finally-sees-justice-for-off-plan-spanish-property-buyers.html "10 year ‘David & Goliath’ crusade finally sees justice for off-plan Spanish property buyers"), about 17% below current levels, echoing other banks’ similarly gloomy predictions. Picking through the bond markets for reliable sources of income might well be the sharpest money-making tool for investors this year. You don’t need a bond bull market, you now have income,” said Jeffrey Sherman, deputy [chief investment officer](https://www.financedigest.com/iris-software-group-names-matt-tuson-as-chief-revenue-officer.html "IRIS Software Group names Matt Tuson as Chief Revenue Officer") at U.S. money manager DoubleLine. (Reporting by Naomi Rovnick, additional reporting by Yoruk Bahceli and Dhara Ranasinghe; graphics by Vincent Flasseur; Editing by Dhara Ranasinghe and Jane Merriman) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---