It is interesting to review the behavior of the different asset classes so far this year: cash keeps attracting a lot of investors, with a nominal 5% return, and it seems nobody’s is worried about ratcuts, which will lower cash returns. However, bond prices are going up like the Fed were to cut soon, as well as tech stocks; bank stocks, particularly regional banks, are trading like the Fed will not lower rates and may even not renew the BTFP. Bitcoin is going up, pushed by the tailwinds of cash ETFs approvals, but also fueled by the speculation that the USD will weaken by the debt and potential rate cuts. Gold is also trading up. To make things more confusing, inflation is going up, perhaps temporarily, but we know what happened with “transitory” in the past. It would appear that investors are confused as signals are completely mixed.
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