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Armageddon Scenarios, Willful Ignorance And ‘Bond Risk Everywhere’
"Market participants are somewhat split between pricing an economic Armageddon scenario and willful ignorance of the issues in the underlying economy", SocGen's cross-asset quant team writes, in a note dated Tuesday.
That assessment captures an apparent "contradiction" that's been variously debated for most of 2019. Bond yields have plunged, but equities have remained buoyant, ostensibly indicating a bit of schizophrenia among market participants.
Of course, there was never any real "mystery".
Yield on the 10yr are up 35bps since Oct. 4. That’s a pretty sharp, fast move and could be signaling a stronger economy — and a real problem for the Fed. Withe some money managers looking to lock in sizable gains before the end of the year, we might just find ourselves with rising yields and falling equity prices in pretty short order.
I was hoping you would find a way to pull all that happened here over a six month period or so together… Fact that I agree with all of this post is a small matter… Best post in a long…………… long time.. Thanks That’s why we log in every day.!!!
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I think we continue along the same path with great volatility, low growth and great hesitation. Valuation and risk have to become bigger factors for equities, while govts struggle with debt and corporations live with lower profits — will 2019 be a big money maker, who cares?
FRED future growth headed nowhere but down:
https://fred.stlouisfed.org/graph/?g=pqBB