Optimism reached its peak, according to two of the most widely-watched indicators of the US economic mood. If history could be a guide to what would happen at the moment, then it would soon be a series of fluctuations in capital markets.
The index of economic surprise in the US, consisting of Citi Group, started to fall from record levels achieved last before the market correction in 2008 and 2011.
Although the economy remains strong, there is no such thing as infinite enthusiasm, especially in the stock market. Most economists say economic data in the United States will not slow down, but investors' expectations are too aggressive in terms of growth, and are unlikely to be met. The impression is that after the last five surges in US economic surplus, 10-year bond yields declined by an average of 1.11%.
On the other hand, the index of uncertainty related to the monetary policy of the Fed enjoys very weak indicators.
If we need to be more accurate, the index is at the levels reached just before the Dot-com bubble and the financial crisis in 2008. Statistically, in the past such periods have led, if not to a crisis, to at least a higher volatility and collapses in the stock markets.
Source: Bloomberg Pro Terminal
Jr Trader Petar Milanov
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