Week Ahead: Gold, Yields Rise; Investors Signaling End To Equity Risk-On?

Global stocks jumped on Chinese stimulus U.S. Tech shares outperform Will Fed clarify dovish stance this week after modest inflation? Bull market to continue…or quit?

The U.S. equity bull market celebrated its tenth anniversary last Saturday, capping that milestone off with a week of gains. Still, we’re not convinced there remain any new tricks up this old bull’s sleeve. Adding to our concerns: both yields and —safe haven assets—are climbing. Could these indicators be signaling that investors are getting ready to put this geriatric bull out to pasture?

We can’t know of course, but if so, it’s being ushered out with a bang. Ahead of the weekend, U.S. equities tracked global stocks higher and any losses from the previous week were wiped out. On Friday, Asian stocks jumped and European shares followed, spurred by China’s commitment to continued stimulus, amid speculation major central banks will not shift to tightening policies any time soon.

U.S. investors decided to commit to positions over the weekend after the Chinese government said it would cut value-added taxes, reinforcing expectations for an eventual pick-up in the world’s second largest economy. Markets were also primed to assume risk after the world’s largest economy showed signs of . The UK’s vote on Thursday to extend the Brexit deadline added to the sense of respite from market headwinds, even if just momentarily.

Will China’s stimulus have enough oomph to power the global economy? We’re doubtful. The last time China’s growth kick-started economic expansion worldwide was after the 2008 Great Recession. But at that time China was already in growth mode. Now, it’s enduring a slowdown. As such, we’re not counting on China to pull up the rest of the world when it’s barely holding itself in check.

S&P Erases Last Week’s Rout, NASDAQ Outperforms

The gained 0.5% Friday

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