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Everything Rally Reignites After Bonds Brush Off ‘Awesome’ Data

Not even a week’s worth of evidence that the U.S. economy is roaring back from the pandemic has been able to derail the concerted rally sweeping stocks and bonds.

The S&P 500 Index gained alongside 30-year Treasury bonds for a fourth straight week, the longest in-tandem rally since August 2008, according to data compiled by Bloomberg. The Nasdaq 100 Index also rose for a fourth week, two months after a spike in rates sent high-valuation tech shares spiraling as investors priced in an economic boom.

It was anything but guaranteed that blowout data would juice demand for both assets, particularly after the March selloff that sent rates to multiyear highs. Instead, when retail sales and jobless claims shattered forecasts, benchmark 10-year Treasuries rallied the most since August. Breakeven inflation rates barely budged, clearing the way for investors to rediscover their affinity for megacap tech stocks.

S&P 500 posts weekly gains as Treasury yields drop

That Treasuries took the data in stride suggests investors may be pricing in a more “normalized” growth environment ahead, according to John Hancock Investment Management’s Emily Roland. That’s different from prior expectations for a supercharged economic boom that some feared would spark runaway inflation that would dent demand for long-term bonds and threaten corporate profits.

“It’s almost as if it just can’t get any better than this, because at the same time you have inflationary pressures that are remaining contained,” Roland, the firm’s co-chief investment strategist, said on Bloomberg Television. “Awesome economic data, inflationary pressures remain contained, and you’re seeing this nice favorable reaction from the stock market.”

The S&P 500 rose 1.4% in the five days to end at a record. The Dow Jones Industrial Average added 1.2% and the Nasdaq 100 gained 1.4%. Both closed at all-time highs. Ten-year Treasury yields hovered near 1.6%, 17 basis points below the late-March peak.

Read More: Everything Rally Reignites After Bonds Brush Off ‘Awesome’ Data

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