📑 Research Notes for 2021-03-01
This week, we look at the 10-year Treasury yield rise to the dividend yield level of the S&P 500, the utility of the yield curve, and the action in small companies.
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Markets See Rare Convergence Milestone.
A milestone was reached in the markets Thursday: The yield on the 10-year Treasury note rose to match the dividend yield on the S&P 500. Why it matters? The two yields have been inverted since the beginning of last year, which is historically unusual.
Why 1.5% on the 10-year Signals a Problem for Equities.
CNBC's "Halftime Report" team discusses how they view the market action in relation to the 10-year Treasury yield.
How The Yield Curve Predicted Every Recession For The Past 50 Years.
The yield curve was once just a wonky graph for academics and policymakers. But in recent years it has become a way to forecast looming recessions. The curve has helped predict every recession over the past 50 years. That means the curve accurately predicted even largely unforeseen downturns like the dot-com bubble of 2001 and the Great Recession in 2007.
Historically High Froth in Speculative Companies.
Well, it appears this is some froth in small caps. This does not suggest that the momentum cannot continue or that Russell 2000 Index or the rest of the market has to decline right away. But I would expect to see a reversion here at some point. There has been a lot of money pumped into the economy, and over the last few months, a big chunk of that has gone into smaller and less established companies. In fact, it is not only less established companies, it is even shell companies that are seeing massive inflows.
Curated by Joseph Lu, CFA®
Joseph has over a decade of experience as an investment professional, primarily in quantitative analysis and portfolio management roles. He is the founder and managing director of Conscious Capital Advisors and a CFA® Charterholder. The CFA charter is a globally respected, graduate-level investment credential by the CFA Institute, a global association of more than 90,000 investment professionals working in over 133 countries.
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