If you are a longtime reader of the weekly Market Outlook, you are well aware that we like to present charts, graphs, and tables in this column. We believe that looking at these provides you the opportunity to see the “whole” picture. As I have repeatedly heard most of my life: “A picture is worth a 1,000 words.”
Looking back as recently as this past month, we see that as soon as investors perceive that the hawkish Federal Reserve appears close to being done raising rates, bond prices rallied and interest rates came down. Much of this was precipitated by weaker economic numbers showing cooling inflation.
In turn, this set-in motion weakness in the US Dollar and a quick rally in stocks. Here is another chart giving even more of this picture. Look at how closely correlated the decline in interest rates and the rally in the S&P 500 index.
