Markets are rallying – are they ignoring a major risk?
The stock market has rallied due to hopes of de-escalation, but this rally may be ignoring a major risk. The bond market pivot is a signal that growth stress is emerging, and equity resilience is fragile and conditional.
The stock market ended March with a relief rally. The bond market pivot is a signal that growth stress is emerging. Yields fell due to growth concerns, not inflation relief. Oil prices above $100 are a constraint on the market. The rally in equities was not convincing, and the market is looking for reasons not to fall apart. The bond market woke up to the damage building underneath, and yields fell as growth blinked.
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