Caught between continuing Chinese New Year celebrations in the east and President’s Day in the west, European markets remain very quiet today. Although early sentiment was relatively positive, markets are mixed at lunchtime.
Not even the unexpected indictments from Special Counsel Robert Mueller could hold the rally back first thing, as US markets closed higher for the sixth straight session on Friday, resulting in the best week for US equities in five years.
The strength of the equity recovery has surprised some, but the weight of money coming out of bond markets is primarily finding its way into equities, which, for the moment at least, look far more attractive than other alternatives.
Rising US bond yields will undoubtedly undermine equity valuations eventually, but while other central banks remain ultra-accommodative, there remains a huge amount of liquidity still looking for a home.
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