What has happened since the market panic two weeks ago? On the chart below, you can see the performance since the lows on August 5th of selected stocks, indexes and even crypto. What was perceived at the time as the beggining of a crash, even putting the Nasdaq on correction territory (-10%), has reemerged as perhaps the beggining of a new upward movement. On the back of a good inflation report and increasing unemployment, expectations for a rate cut in September have given the necesary tailwinds to the market to look for all time highs again. On the bond market side, the Bloomberg HY index is now printing the lowest yields of the last 2 years, which tells us it’s not only buybacks that are pushing the equity markets, it’s a renewed bull market sentiment. There is one difference though: the yen carry trade does not appear to be present, as it is trading at 146 vs the dollar after trading as low as 162.
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