On the one hand, there is the rapid sale of treasury bonds and the 10-year income, which increases during such periods, reached maximum since December 2015, Take-profit.org reports.
On the other hand, stocks are strengthening, and the Dow Jones Industrial Average set a new record.
Such differences may be explained by the fact that each of these markets are concentrated on different aspects of the policy of a new president, Deutsche Bank’s Chief Economist Torsten Slok said.
“The fixed-income markets and stock markets observe different aspects of the policy after elections.
The market of rates is focused on the growth of inflation and its consequences, while the stock markets are oriented to GDP growth”, he notes.
In other words, the fixed-income investors find prospects of inflation growth, thanks to budgetary incentives and trade restrictions, expecting for more rapid increase of FRS rates.
The equity investors, on the contrary, hope that budgetary incentives, decreasing taxes and deregulation will cause speeding up GDP growth and corporate revenues.
These factors fueled the volatility of rates and equities, as MOVE and VIX indices show, which move in different directions, for the first time for last ten years.
