Tom Lee, head of research at Fundstrat, is well-known as a stock-market bull. And here’s one chart that he just can’t get his around.
It’s of 10-year yields around the world. The yield in the U.S.
BX:TMUBMUSD10Y
is higher than even Greece’s
BX:TMBMKGR-10Y,
which admittedly has made strides in reducing its debt burden but still has a worse credit rating than the U.S.
Lee appended further “wut” tags to the bonds of Spain
BX:TMBMKES-10Y,
Germany
BX:TMBMKDE-10Y
and Japan
BX:TMBMKJP-10Y.
Inflation is higher in Germany, Spain and Greece than in the U.S., and Japan isn’t far behind. Lee adds that the U.S. also doesn’t have a currency that is riskier to justify the yield difference.
“Maybe this is another example of how there’s been a lot of momentum pushing yields higher, but it may be divorced from fundamentals,” he said in a video message.
Lee did add that it doesn’t necessarily mean that things will change next week.
There are of course other reasons why U.S. yields are higher. In Japan’s case, the central bank there is still buying debt, while the Federal Reserve is shrinking its balance sheet. Germany has a much smaller debt burden relative to the size of its economy than the U.S.
The S&P 500
SPX
has gained 11% this year, but has declined by 7% from its late July peak.
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