U.S. Equity Market Shows Growing Number of Late-Cycle Signs, CE Says
Dow Jones10:07
While the recent equity selloff could be another temporary setback, a growing number of late-cycle signs in the U.S. equity market are emerging, Capital Economics chief markets economist Jonas Goltermann in a note. A more sustained drawdown is likely over the next year or so, and it will be accompanied by a fall in treasury yields, he adds.
Hot U.S. inflation data over the past couple of days have been overshadowed by renewed questions around the sustainability of the artificial-intelligence boom, he says.
With both equities and treasury yields dropping sharply for the first time since the U.S.-Iran war started, the combination is consistent with what we would expect to see if the AI boom were to start unwinding, he says.
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