James Brodie
Head of Learning & Development, Flux
Equities Hit Record Percentage of Total US Household Financial Assets
Fed hike priced at 87%; BOJ seen certain to hike; IG credit splits on AI premium; 10Y at 4.96%; equities hit record 48.2% of US assets.
Three central bank meetings this week:
Wednesday; US Fed, with 87% chance the hike priced by the OIS, and 89bp hikes over the next 12 months.
Thursday: BOE just 20% chance they hike but 107bp hikes over the next 12 months.
Friday: BOJ, market sees 100% chance they hike this week and 92bp hikes over the next 12 months.
Investment grade credit is splitting in two. One year ago, IG ex-AI traded just 20bps tight to the broader IG index - today it trades 50bps wide, a record divergence, and is increasingly pricing like junk. The AI-adjacent names are hoovering up capital and institutional demand, leaving everything else to reprice wider and drawing liquidity away from Treasuries in the process.
U.S. 10-year currently at 4.96%. (Bloomberg)
Equities now account for a record 48.2% of total US household financial assets. This includes stocks held directly, as well as equities held indirectly through life insurance companies, private pension funds, government retirement funds, and mutual funds. This figure has risen +13.9 percentage points since the 2022 bear market. By comparison, at the 2000 Dot-Com Bubble peak, US households held 38.7% of their financial assets in equities. For perspective, this proportion never exceeded 20% between 1974 and 1992. (Kobeissi Letter)
Written by
More News
A Bullish Place
Money managers trim Brent shorts and add RBOB gasoline length; CTAs max long in crude futures
13 page report
Brent climbs above $105/bbl on supply concerns
Chevron CEO Mike Wirth said that oil buffers that limited increases in crude oil prices earlier in the Iran war have been depleted....
Brent sells off from nearly $109/bbl alongside minimal damage to E/W pipeline
US diesel prices have surpassed the $6/gal mark for the first time in history, according to AAA gas price data...
Brent Hits $110, Yields Surge, Housing Inventory Imbalance
Brent hits $110 on Houthi pipeline strike; PPI hot at 5.4%; yields surge to cycle highs; diesel tops $6/gal; housing inventory imbalanced.