ETM’s View on the US Business Cycle, Treasuries, S&P 500

This is an excerpt from the highlights of the ETM US Business Cycle Monitor published on 13 March, when the US 10yr Treasury yield was just below 2.00% and the S&P 500 was at 1,556 points:

Risk to bond market is to downside and for long bond yields to rise above 2% in coming months. Stock market momentum remains higher toward end 2013, although short-term correction should not be ruled out.

The US 10yr Treasury has climbed to the highest since 2011, rising to 2.60% today, while the Zimbabwe-ification of the S&P 500 has continued for the index to rise to 1,687 points before dropping back to 1,592 points today.

For perspective of why the US markets have behaved in the way they did in the past three months, the full March 2013 ETM report can be downloaded here.  For those wanting a forward looking view of the market, the US economic environment is changing rapidly as broad money growth slows.

We will cover this and the implications for tactical asset allocation to Business Cycle Monitor subscribers in the coming week.