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Global equities ticked higher last week while the bond complex largely consolidated or ticked higher.
Market participants appear to be shrugging off negative economic data and are pushing equities higher. The unprecedented actions by both the Federal Reserve and Congress are acting to support market prices. Stimulus programs, rates near zero, various forms of QE, and direct buying of junk bonds by the Federal Reserve are acting across the spectrum of economic participants from consumers to riskier credits. Additionally, recent momentum has been on the side of the longs. Opposing this wave of support seems problematic for those who see a market that is richly priced as compared to economic fundamentals.
The coming week is a heavy data week. Additionally, it will be interesting to see how market participants react to the unrest that has spread across the U.S. over the weekend. Given that equities have been a lopsided one way trade higher from the bottom, they are likely susceptible to outsized short term pullbacks.
All the best.
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