July 19, 2021
Good morning,
It appears that the bond market had more than technical short covering on its mind two weeks ago when yields plunged to new reaction lows. And it seems that around mid-day Friday, the equity market began caring about why yields were dropping. The delta variant is being labeled a pandemic for the unvaccinated and concerns of global economic growth peaking are running through global markets.
A correction? Yes. More than that – we’ll have to wait and see. As far as the markets go, this will be a battle between excess liquidity in global markets and the global economic drag stemming from largely undeveloped, broadly unvaccinated geographies.
We’ll raise the bond/equity ratio modestly this morning in non-taxable accounts in TQM-IRA because that’s the model’s weekly output following Friday’s sell-off. Other than that, we wait and watch.
See you Wednesday.
Be well,
Mike