The most incomprehensible thing about the beginning of the year is that with the massive sales of fixed income, as expectations of rate cuts fade, equities are holding on without flinching and are not even incurring losses for the year. That the US bond had reached 4.75%, when in December it had touched 4.1%, should have translated into a decline of at least 5% for the stock market; just like if it went to 5%, at least 10%. He T-Note It reached 4.8% on Wednesday, but after the expected inflation figure was announced – without any scare, with an increase of four tenths, but which allowed the interannual rate to be maintained at 2.9% –, There was a relaxation of the world’s main investment asset to 4.6%.
The market calmed down because by not making a reading that reflation becomes the Gordian knot of the markets, the achievement of profits continues to be the north of the compass that guides investors. It served Wall Street to remove any kind of fear and displace the possibility of closing the Trump gap. What is he Trump gap? The level prior to which the S&P 500 was trading on the day of the US elections, November 5, and which is technically a buy support, in case of resistance, or a guardrail of fear that in case of loss deepens into greater falls. .
But thinking that the state of happiness that has been declared between bonds and the stock market is lasting is, at the very least, very risky. The inflation data in the US has left standing the only drop in the price of money in the year, when months ago between three and four were expected. It has even served to advance the only estimated quarter a few months, until the June meeting.
But the tranquility has a temporary tone and with Wall Street trading in ‘bubble territory’, because profit multipliers are paid 20% above the historical averageit is reasonable to think that any monthly deviation of inflation from the Fed’s objective of bringing it to 2% this year will cause a market tremor.
It is by no means ruled out that we will see the US bond again in the range between 4.75%-5%. And, if this happens, it will serve to provoke what I believe is a long-awaited opportunity to enter the stock market. In reality, there are many investors who maintain a stock market exposure below what they would like because they have been storing money in fixed income camps for some time. The problem is that his last decision was to change this money from monetary to fixed income with some duration. And, just as last year ended and the current one has begun, many theoretically conservative funds accumulate losses. Surely, the moment at which the entry point into the stock market occurs – with a sharp fall – coincides with a very attractive fixed income.
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