Most pipelines lost 10% or more since July. Their businesses did not change. Second quarter results were strong. TC Energy, Williams, ONEOK, Pembina and Energy Transfer all raised their guidance. What changed was the price of money. U.S. 10-year Treasury yield: June 26: 4.37%, pipelines near their highs July 24: 4.68%, Enbridge, TC Energy, Pembina and Keyera peak Aug 28: 4.72%, Fed Chair Warsh warns of a hike at Jackson Hole Sept 16: 5.01%, the Fed hikes to 3.75% to 4% Sept 28: 5.24%, the highest since 2007 In Canada, the 10-year hit 3.99% on September 25, up 36 basis points in four weeks. Pipelines are bond proxies. Their cash flow is contracted for decades, so the market discounts it like a long bond. When the discount rate rises almost a full point in three months, the present value of those payments falls, even though the payments did not change. The tell: the U.S. utilities ETF fell 15%, about as much as the Canadian majors. The S&P 500 slipped 2%. The full timeline and scorecards are in my free pipeline report: https://thedividendguyblog.com/pipelines-report/ Which bond yield do you watch for your pipelines, the U.S. 10-year or Canada's?
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