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Over the past two months, risk sentiment has improved amid receding fears of an imminent US recession. Economic data have been generating strong upside surprises and the US equity rally has broadened with cyclicals outperforming defensives since the beginning…
Core inflation in the US should drift lower in the coming months. However, it is too early to conclude that the US is completely out of the woods when it comes to inflation. Given that the US job market remains tight, and the economy remains resilient, it…
President Joe Biden’s approval rating trended down from a peak in February this year of 45.8% to the current level of 42.1%. Meanwhile his disapproval rating rose from a trough of 50.9% to its current 54.3%. The negative trend is worrisome for the Biden…
BCA Research’s US Bond Strategy service cautions against turning bullish on corporate bonds. Corporate bonds have delivered strong excess returns versus duration-matched Treasuries during the past two months. Yet the team’s fair value models, based on…
The S&P 500 rally broadened in July, lifting this year’s laggards. Surging long yields are altering the macroeconomic backdrop, as the market absorbs that monetary policy will stay restrictive for a long time. Yet, a move down in yields is more likely than a move up over a tactical horizon. Q2 earnings were better than expected but investors were unimpressed – the good news is already priced in. The market is overvalued and is close to being overbought, which makes it vulnerable to disappointment.
Nonfarm payroll employment increased by less than anticipated in July, rising by 187 thousand versus expectations of 200 thousand. In addition, the June increase was revised down from 209 thousand to 185 thousand. Similarly, average weekly hours worked…
The S&P 500 has had a rough start to August. The index’s selloff since the end of July has pushed it down by 2.4%. Notably, the weakness is broad-based with all S&P 500 sectors in the red over this period. This marks a sharp reversal in performance…
Some thoughts on this week’s bear-steepening of the Treasury curve and this morning’s employment report.
The recent ‘Goldilocks’ stock market rally is predicated on the hope that developed countries really can kill inflation without killing their economies. But one important warning sign suggests that the rally has gone too far too fast, and is vulnerable to…