‘Cross Asset Conundrum’ Signals Bad News to BofA as Bonds Rally
- Treasuries are outperforming small cap stocks, commodities
- Rising ratios suggest that rotation into safety at play: BofA
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This summer’s surprise Treasury rally has bonds beating everything from small-cap stocks to commodities -- a worrisome signal to Bank of America’s technicals team.
The ratio of U.S. bond futures versus the Russell 2000 has ticked higher since March’s all-time low as the crumbling reflation trade weighs on small caps. It’s a similar story in commodities: After underperforming copper and crude oil over the past few months, bonds are fighting back.