US and international stock market divergence certainly has investors wondering about US stocks.
In the backdrop for US stock performance has been another quarter of excellent profit growth.
Now, the US economy is being described as having the best of many worlds. Real growth has gained altitude while inflationary trends are fairly stable.
The Federal Reserve Bank has been primarily focused on containing inflation, but now they may have to get ahead of it.
Italian bond yields rose swiftly to multi-year new highs when the Italian president refused to swear in a trained economist and Eurosceptic as Italy’s next finance minister.
In a deliberate attempt to get ahead of the inflationary curve, the US central bank and fixed-income market participants are causing US interest rates to rise.
The growing trade deficit of the US has come under increased scrutiny as of late. Notably, the trade deficit now runs around $653 billion annually and continues to grow.
US stock and bond market volatility was further impacted by a temporary government shutdown and fears of a weak auction as the US Treasury rushed to roll-over short-term bills and notes.
All else equal, growth based on borrowed money instead of growth based on production produces unnecessary inflation.
Another year has come to a close. Now, the performance of economies and financial security markets can be journaled into history.