Assets don’t usually rise or fall in unison
Gold has gained following terror attacks in the U.K. Photo: neil hall/Reuters
Stocks, bonds, gold and bitcoin—assets that rarely move in unison—have all been surging this spring, an everything rally that leaves investors confounded about how to play the plodding U.S. expansion and vulnerable to sharp reversals in fortune.
Major U.S. stock indexes have soared to records this month, reflecting some investors’ confidence in the continued U.S. economic recovery along with expectations that large technology firms will accrue further market-share gains. At the same time prices of bonds, which often decline when stocks are rising, have risen lately, as U.S. inflation readings cooled off alongside a slowdown in some key industries.
Gold has gained following terror attacks in the U.K., and turmoil in U.S. politics centering on the administration’s legislative prospects and a key congressional hearing this week featuring former FBI director James Comey.
The simultaneous gains have begun to concern some investors. Many point to a wave of money that is driving up asset prices, tied in part to lower bond yields and a lower dollar—a confluence of events they say feels good while it lasts but can’t go on forever.
“We do think there are distortions” in the markets, said Iman Brivanlou, who oversees high-income equities at asset manager TCW Group Inc.
The Dow Industrials this month have posted two record closes, their first since March, and the 30-stock index remains just 0.33% below its all-time high despite a decline Tuesday of 47.81 points to 21136.23.