This video first appeared in Livewire on 2 April 2024
It's a known fact that markets are forward-looking beasts, but even the price action of the last month has stumped many seasoned investors. Yes, inflation is coming down with the recent local inflation indicator showing a 3.4% print for a third consecutive month.
But it's also true that the jobs market (both here and overseas) is still extremely tight, economic growth (in most parts of the world) is sluggish, and Australian consumer confidence is shaky at best.
And yet, markets seem to be disregarding these headwinds. The S&P 500 is up 3.5% over the past month and 10% year-to-date. The gap between the US 10-year yield and the US 2-year yield, a once reliable recession indicator, is closing in quickly. And everything from gold to Bitcoin is hitting all-time highs.
And it's all predicated on the hopes that rate cuts come at the time that markets are expecting.
So is this an "everything rally" - and will investors who bought the narrative be left holding the bag?