The Divergence In Equity And Credit Markets
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Up until February, the Russell 2000 and the 10-year Treasury yield were moving up in lock step. That’s a sign that markets expected an economic rebound which would eventually drive up the Fed Funds rate, but that the growth would enhance profits even so. Now, however, equities and bonds are diverging, with bond yields falling back down even as equities continue to rise. Bonds are no longer sending the message of unalloyed economic optimism that will induce rate hikes.
In the wake of 12 consecutive highs on the Dow Jones Industrial Average, that message is worth considering.
Disclaimer: All data and information provided here is for informational purposes only. I am not a financial advisor, and do not recommend the purchase of any stock or advise on the suitability ...
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