Why are stocks, bonds telling a different growth story?

People shift to conservative investments amid campaign



Stocks are at record highs, the job market is booming and fears about China’s deadly coronavirus have eased on Wall Street. The bond market, however, is again flashing a potential warning signal for the global economy. 

A sharp rally in Treasurys in recent weeks led parts of the U.S. yield curve to invert, a signal that is often a harbinger of a recession. An inverted yield curve happens when shorter-term bond yields climb above longer-term ones. Investors flocked to safe-haven assets like Treasurys recently on fears that the virus could hinder global growth, sending long-term yields lower.

That’s left some investors scratching their heads as the American consumer—the pillar of the U.S. economy—remains strong while the U.S. economy is in the midst of its longest expansion on record.

“It seems like the stock market is a step behind in realizing the potential for slowing growth in the coming months,” says Gregory Daco, chief U.S. economist at Oxford Economics. “In reality, very few people are exposed to the coronavirus in the U.S., yet the uncertainty of the outbreak and the potential ramifications it could have on the stock market would still have a direct consequence to average households.”

Retirement plans:401(k) and IRA millionaires at Fidelity hits a record

Divorce, alimony and taxes:Divorce, alimony and taxes: What you need to know

Traders work on the floor of the New York Stock Exchange on Oct. 4, 2018 in New York City.

A tale of two markets

The stock and bond markets have been at odds with each other in recent months, telling two different stories about the outlook for growth ahead. The Dow Jones industrial average is trading at all-time highs, a sign that stock investors are pouring money into shares under the belief that the U.S. will shake off challenges from the virus if it’s contained.


Source link

Categorized as Business

By Bernice Caldwell

Bernice is one of the finest authors Industry News Today portal has until now. Bernice's linguistic and well-written technique is one of the plus points that have the readers glued to her articles. Bernice currently heads the Healthcare and Services domain as her knowledge on the medical topics is immense. She has just joined the Industry News Today portal 6 Months back but the love for writing can be very well seen. She may be short on experience but it has definitely not stopped her from presenting some of the finest articles. Bernice is currently a very well-known personality on the portal to have shown her skillful writing in such a limited time span.

Leave a comment

Your email address will not be published.