The Household Wealth Boom, New Market Highs, and Evolutions in the Yield Curve
June 28, 2021 | FIRESIDE CHARTS
Aided by stimulus payments, QE, and last year’s booming stock market, household wealth has ballooned in the U.S., accelerating an already notable trend and pocketing households an additional $13.5 trillion in wealth in 2020. And this year’s market performance isn’t showing signs of undercutting the trend as the S&P 500® Index shakes off its reaction to last week’s Fed announcement to close at a new record high on Friday. Are both trends sustainable in the midst of climbing inflation or could there be a correction approaching? The Fed also set a new record last week, and we saw some movement in the yield curve, with the entire curve moving into negative territory when taking inflation into account. And is there any life left in the commodity rally?
- Great news for the U.S. consumer, but it looks like a correction waiting to happen:
Source: The Chart Store, from 6/28/21
2. In a rare show of strength in both breadth and depth, every major index and all sectors of the S&P 500 were up last week driving the S&P 500 to a new record high:
Source: The Chart Store, from 6/28/21
3. After three days of “tantrum,” the markets seemed to forget all about the Fed…
Source: The Chart Store, from 6/28/21
4. The Fed was busy buying bonds this week, setting a new record for their balance sheet. No signs of a taper despite all the talk…
Source: The Chart Store, from 6/28/21
5. Bond markets repositioned the yield curve to higher rates in the short run and lower rates at the long end:
Source: The Chart Store, from 6/28/21
6. Counting in inflation via the CPI, the entire yield curve is decidedly negative:
Source: The Chart Store, from 6/28/21
7. The commodity rally seems to be “exhausted”. Was this a false breakthrough?
Source: The Chart Store, from 6/28/21
8. If you haven’t gotten vaccinated yet, please know the virus is still out there and the new mutations are here in the U.S., spread faster, and one is more deadly.
Source: The Daily Shot, from 6/28/21
Disclosure: The charts and infographics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.