Executive Summary:
Two scenarios to put on your radar: Bond prices might melt down if the Bond Vigilantes are roused by the downgrading of the US’s sovereign debt rating and/or the prospect that Trump’s tax-cut bill worsens the federal budget deficit outlook and/or tariff-related inflation. But a bond market meltdown could force Washington to set the US onto a more sustainable fiscal path—a positive end result for bonds and stocks. … The stock market might already be melting up again. … Also: Consumers are worried about tariff-related inflation coming, sentiment surveys suggest, but they’re spending apace nonetheless. And that’s not just spending on stuff in advance of anticipated tariff-related price hikes; they’ve been eating out a lot too. Check out the accompanying chart collection.
US Financial Markets: On the Edge of a Meltup or a Meltdown?
It’s time to think ahead. Are stocks on the verge of a meltup? They might be unless bonds are on the verge of a meltdown. So, which will it be? We can make the case for both scenarios. Let’s do so:
(1) Bond market meltdown. Since the start of the year, we’ve opined that ...
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