US 10-year TIPS breakevens have widened to fair value estimates derived from risk assets. Further upside will require rising rents and wage growth. Most importantly, rent-related searches are surging thanks to vaccines and fiscal stimulus, suggesting OER YOY will soon rebound.
Sector Performance Recap Industry Total Returns and Spread Performance Credit Market Conditions Scorecard Reported Data and Real-Time Indicators The Auto Industry Will be Challenged to Keep Up Issuance Recap View PDF View the PDF
Investors maintain strong risk-on flows led by mid and large caps of both the domestic and global variety. Nearly 88 cents of every dollar of in-flows have been directed into equities, the most since October 2018. Non-cyclicals and now thematic funds remain out of favor.
Sector Performance Recap Industry Total Returns – Energy, Materials, Travel Still in Focus Investor Flows: Risk-On Flows Have Seemingly Peaked What’s Going on With Credit Volatility? Americans are Back on the Move Vehicle Sales Struggling to Maintain Pace Issuance Recap View PDF Click to view the full report.
Investors’ flows into risk assets reached a crescendo in mid-February. We are beginning to see dampened demand for global equities and inflation protection, but increased demand for lower beta sectors and even government bonds.
Inflation expectations have been red hot as investors consider pricing in headline CPI above 2.5% YOY. Given exceptionally high Sharpe ratios and the ubiquity of the inflation revival across the globe, investors need to see realized inflation prints surpass long-run averages to stay committed.