Just as it was beginning to look like the bond market’s luck was finally running out, President Trump made some remarks that all but guarantee that the bond rally will go on for a little while longer.
As investors ponder whether to “sell in May and go away,” strategists say we’ll either see a “summer of stocks,” or a “summer of shocks.”
If anyone was looking for more proof of how central banks’ actions are distorting the markets, here it is: investors are trying to “front-run” the European Central Bank (ECB) – in the words of analysts at Bank of America Merrill Lynch — by buying investment grade bonds.
The European Central Bank helped credit as an asset class, and of course corporate bonds within it, become attractive to investors again.
Bearish sentiment abounds in financial markets, and the contrarian “buy” signals intensify. And yet, few analysts have the courage to say the correction/bear market is over and this is the time to jump into the market.
Stock markets swooned again last Friday, when the US jobs report showed the number of jobs created in January was well below expectations, at 151,000 compared with the 190,000 forecast by analysts.
Investors can no longer find comfort in turning bad news into good news, as they once did because any piece of bad economic news meant the Federal Reserve held interest rates rather than hike them.