Can Equities & Rates Still Rise Together?
Qi’s Macro Risk Model Says — Not Right Now.
1. Rate sensitive vs. bond proxy stocks – too far, too fast?
2. EURGBP – upside risks
3. EM bonds – trend break or pause that refreshes?
Since mid-April, the S&P 500 has rallied — but under the surface, the macro sensitivities have shifted meaningfully:
• Positive Sensitivity to 10yr yields is falling.
Earlier in the year, rising yields were seen as a sign of growth / reflation. Now, that sensitivity has been fading.
• Positive Sensitivity to USD is falling.
The equity market is also showing reduced tolerance for a stronger dollar, consistent with concerns on FCIs.
• High Yield credit spreads matter again.
Negative sensitivity to wider HY spreads is rising at YTD highs — this makes for a more fragile risk backdrop if any cracks appear.
Continue reading our analysis on the other headlines by downloading the PDF below
