Bonds And Stocks Seem To Be Telling Different Stories On U.S. Economy

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MarketWatch has an interesting post for those investors who believe the stock market works perfectly at discounting risks and rewards. As they point out in the article, if you believe what stocks are telling us, the U.S. economy and corporate profits must seem to be on track for a huge recovery.

Yet, the market for U.S. government bonds, considered among the safest assets around, seems to be telling a different story. After a spectacular 50% surge since March, stocks on the S&P 500 Index (SPX) have continued rising through the summer and into September. 10-year auction, (UST10Y) and Fed Beige Book might help decide who has a better gauge.

Analysts interviewed in the story speculate that there could very well be a jobless recovery in the economy after the “sugar-high” from the government stimulus measures. All of this could lead to rising joblessness, consumers spending less and lower inflation. Which are all good conditions for bonds. Also, some good comments from readers who obviously understand the bond market.

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