The economic expansion just turned 10 years old, tied for the longest on record, according to the National Bureau of Economic Research. It’s only fitting with this milestone that economic skepticism is peaking once again. Many investors, especially in the bond market, have been bracing for an economic slowdown and calling for Federal Reserve (Fed) intervention as global trade disputes rattle financial markets [Figure 1].

The trade situation is unnerving, and we’re aware an escalation could eventually wear on an aging expansion. It’s important to remember, though, that with sound fundamentals and a

Should stock investors be concerned about the signals coming from the bond market? Trade tensions were the biggest reason stocks suffered their first down month of 2019 in May, but worrisome signals from the bond market contributed. This week we look at what the bond market signals mean for the stock market and examine the disconnect between the bond market and economic and stock market fundamentals.

Why Are Yields Falling?

Before we look at what lower interest rates mean for stocks, let’s look at why they are so low in the first place. For one, inflation has been stubbornly low and will likely remain so based on marke

The bond market has been baffling recently. While U.S. stocks surged earlier this year, the 10-year Treasury yield quietly crept lower, puzzling market participants as the typical relationship between stocks and bonds (higher stock prices, higher yields) broke down at a rapid pace.

Then, the alligator jaws snapped shut. The S&P 500 Index has dropped about 6% since reaching a record high on April 30, and the decline of long-term government bond yields across the globe picked up speed [Figure 1]. Last week, the 10-year yield posted its biggest weekly drop in over four years to close at a 20-month low of 2.12%, and parts of the

Our favorite leading indicators are signaling that futher economic growth and stock market gain may lie ahead. With the economic cycle celebrating a record tenth birthday this summer, the big question is how much longer can the expansion go? This week, we will look at our Five Forecasters for late-cycle warnings. Historically, these indicators—which are summarized in our Recession Watch Dashboard—have collectively signaled a transition to the later stages of the economic cycle and an increased potential of an oncoming recession and bear market.

In this week’s commentary we will examine market breadth and stock v