The recent backup in yields is happening at an unfortunate time. In nominal terms, debt held by the public is at an an all-time high (approximately $14.3 trillion).
It has certainly been a good couple of weeks for financial stocks. But the good times still haven’t been good enough to bring bank stocks out of last place among 24 developed market industry groups.
Since the introduction of the National Income and Product Accounts (NIPA) in 1946, the US has experienced 11 recessions.
As U.S. equity markets continue to forge new highs, we take a look at our strong and weak close indicators to gauge investors’ conviction levels in the latest moves.
Listen, before we go through a litany of economic charts that pour some cold water on the recent bout of optimism regarding US economic growth prospects we want to stress that we don’t believe economic growth is about to fall off of a cliff.
Regardless of the series you use, the USD seems to have broken out of a 20-month trading range and is trading at the highest level in well over a decade.
More than one out of five developed market stocks and more than two out of five emerging market stocks are in a bear market (down over 20% from a high) in the past 200 days.
We all know that stocks are a leading indicator of economic growth and disappointingly recent breadth measures suggest that economic activity may slow over the next several months.
Back in September we explained how US treasury yields were at parity with foreign government bonds for many foreign investors (namely euro and yen-based investors) from a currency hedged basis.
General consensus seems to have quickly moved to a view that a Trump administration is going to be inflationary for the US and the global economy.