Stocks seem itching to run, but the bond market has responded, “Not so fast!” — with yields breaking out in both nominal and real terms. This chart of the 5-year is an eye-opener. How can equities break out while the rate environment is getting more hostile? pic.twitter.com/EUbTahvg7k
— Jurrien Timmer (@TimmerFidelity) July 10, 2023
The rate environment is complicating things for equities. Here is the Fed’s expected terminal rate (5.4%), against the 5-year TIPS break-even (2.23%). That’s a big gap. Real rates are getting more positive. pic.twitter.com/gLxjnSrYPa
— Jurrien Timmer (@TimmerFidelity) July 10, 2023
Real rates are moving up. Look at the 10-year. That’s a real yield of almost 2 percent! pic.twitter.com/v5rH9XzueE
— Jurrien Timmer (@TimmerFidelity) July 10, 2023
JUST IN: The 30 year mortgage rate has hit a new decade high at 7.38%, up 23 bps since last week, per BankRate pic.twitter.com/htoyzqhoLp
— unusual_whales (@unusual_whales) July 10, 2023
If earnings and liquidity are the two most-important influences on the stock market, sentiment is a close third. Below we see that the cycle for margin debt came full circle in 2022, and suggests that traders are anything but “all in.” pic.twitter.com/nspfqLEUwc
— Jurrien Timmer (@TimmerFidelity) July 7, 2023