Bonds or Stocks?
As short rates rise, I’m getting more convinced we are moving through the first half of the recession, perhaps even past the half-way mark. Once 3month rates broke above Fed Funds, yield curve is signaling we are in the recovery stage and may very well pull Fed Funds higher sooner rather than later.
It’s also possible the dollar rally has peaked and the greenback will resume its downtrend. In this case, this will be bullish for stocks, especially commodity names.
The million dollar question is “when will the institutional buy-side start favoring stocks over bonds and begin deploying their mountains of cash equivalents into equities?”
