The world is strange. The news comes of an economy that is going badly, or worse, and the stock exchanges are at their peak. Economic data on the first quarter of 2020 for the US economy are published and they are bad. Today NBER announces that the US has been in recession since February, and the world bank, icing on the cake, is forecasting a 5.2% drop in world GDP. All bad news, but, curiously, the stock exchanges are at their peak.
Let's look at Nasdaq 100:
We are at the highs of the year.
We are not at the highs of the year, but we are close to it, and above all we have exceeded the January values. Meanwhile, the 30-year long-term government bond yield has also fallen.
After seeing yields rise in early June, government bond yields have declined for the past two days, both 30 and 10 years, and the beauty is that around $ 700 billion worth of securities will also have to be issued on the market. To make a comparison, Italy issued 14 billion euros in early June, about 16 billion dollars. In a month, the US will issue just over a quarter of the Italian state debt …
How does everything go well? Simple, the FED is putting all possible liquidity:
In the end, the Fed pours in so much liquidity that it is practically buying government bonds and stock market indices, while the expected profits from the SP500 drop. All a game of enormous liquidity introduced.
There is no inflation because all this liquidity, for now, remains frozen in the assets, in keeping the stock market values and the yields of government bonds high. This money is not spent, it will be, at the limit, when Trump will manage to make it. get to companies and people. For now only the values of the various assets are inflating….
The article GDP USA FALLS, FLIES THE BAG, DROPS. A mix of cons comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/il-pil-usa-cade-vola-la-borsacadono-i-rendimenti-un-mix-di-contro/ on Tue, 09 Jun 2020 06:00:14 +0000.