WS #15382
Underlying economic fragility is evident in the US trade deficit widening to $105.6 billion in August and bond futures seeing extreme net buying as credit spreads hit the 85th percentile historically. This setup, combined with the 10-year yield hitting 5.31%, suggests that while equities are being propped up by tech, fixed income markets are pricing in significant downside risk and potential Fed policy shifts toward hiking.
Macro Fragility and Bond Market Stress
Underlying economic fragility is evident in the US trade deficit widening to $105.6 billion in August and bond futures seeing extreme net buying as credit spreads hit the 85th percentile historically. This setup, combined with the 10-year yield hitting 5.31%, suggests that while equities are being propped up by tech, fixed income markets are pricing in significant downside risk and potential Fed policy shifts toward hiking.