JPMorgan Says Watch These Market Correlations for Warnings
- Watch credit spreads versus equities, strategist Normand says
- Divergence of EM and DM currencies versus dollar is notable
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A shift in correlation between U.S. equities and credit spreads, and a divergence between developed- and emerging-market currencies versus the dollar could be early warning signs of major market turning points, according to JPMorgan Chase & Co.
Clients have become more cautious as both bonds and stocks have rallied this year -- a combination that bothers many investors -- and as the significant drop in U.S. yields has coincided with only modest declines in the dollar versus its peers, JPMorgan strategists led by John Normand said in an April 5 note. However, those may not be the relationships to be concerned about, they said.