Market Notebook

Discussion – 

Both equities and bonds have broken out above their respective ranges and have held a closing price above. It appears that short-term momentum is positive for both.

Bond market participants appear to be signaling that they agree with the Federal Reserve that recent inflationary pressures will be transitory. It will likely take several months for the inflationary picture to become more clear. Ideally, inflationary pressures, if transitory, would subside by the end of the summer. Since the real economy appears sound, interest rate expectations appear to be the most probable factor that could cause a correction in equities.

Given the extended nature of equity prices on a valuation basis, a correction at some point is likely. As always, the exact timing is unknown. It may be prudent to rebalance portfolios and/or raise cash from winners depending on your strategy.

Two growth candidates to point out are PLUG and STEM. They will be added to the notebook.

Note: The total return value for ticker IAU remains incorrect.