Too Much Information From Markets Is Jamming Up Real-Time Trading Models
- Stocks, bonds swing wildly and often send conflicting signals
- S&P 500 tends to behave like other times before recession
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Trying to use stock and bond signals to forecast the economy is never easy. With all the wild swings in markets these days, it risks becoming an exercise in the absurd.
Sometimes up, sometimes down, share prices and yield curves are bouncing around so much that discerning a macro message is borderline impossible. Two gains and three drops in the S&P 500 this week left it down 6% on the year, but up 8% from its low. Which message to heed? Bonds are equally indeterminate. The 2-year/10-year yield curve has inverted and un-inverted in the space of two weeks.