Click HERE to access the FSInsight COVID-19 Daily Chartbook.
We are shifting to a 4-day a week publication schedule:
- SKIP THURSDAY
STRATEGY: Equity markets "de-equitize" faster in 2021 = upside + $3.2T dry powderThere are central views about markets and among the most accepted of these is that underlying inflationary conditions are going to "surprise" markets and the Fed is already behind the ball. I don't personally have a view on this but at the extremes, inflation is indeed a headwind for markets. That is, too much inflation is bad for equities just as much as too little inflation is bad for stocks.But the best contemporaneous gauge is looking at the absolute level of the US 10-yr. Sure, other measures are useful such as inflation breakevens, etc., but the US 10-yr is going to reflect the market's fears about inflation. Think about it:or- if deflation was a risk, rates would be plunging- if inflation was a risk, rates would be risingLooking at the recent trend in rates, it seems like interest rates are actually trending lower. Take a look below. - the 10-yr was nearly 1.8% in early March- it has made lower highs since- it is currently 1.5687%There are many ways to interpret this, but to me, one takeaway is the bond market is s...