Equities No Longer Being Viewed as Attractive: MUFG's Halpenny

The video discusses the current trends in bond yields, highlighting the momentum towards a 2% yield on the 10-year Treasury. It explores investor sentiment regarding the peak in corporate earnings and the shift towards fixed income as a safe haven. The swaps market is analyzed, with predictions of potential rate cuts by the end of 2020. The interplay between equity and bond markets is examined, with a focus on how these dynamics influence Fed policy and market expectations.

What is driving investors to consider fixed income as a safe haven?

• Rising corporate earnings

• Attractive equity valuations

• Stable inflation expectations

• Perceived peak in corporate earnings cycle

What is the swaps market predicting by the end of 2020?

• Three rate hikes

• Three rate cuts

• No change in rates

• One rate cut

What historical trend is mentioned regarding the two-year yield and the Fed funds rate?

• The two-year yield below the Fed funds rate often precedes rate cuts

• The two-year yield never falls below the Fed funds rate

• The two-year yield is irrelevant to rate cuts

• The two-year yield always exceeds the Fed funds rate

What could potentially cause the yield curve to steepen?

• A series of rate hikes

• Stable equity markets

• Communication from the Fed without actual cuts

• Actual rate cuts by the Fed

What is the relationship between equity markets and bond markets as discussed?

• Bond markets drive equity market trends

• Equity markets can influence bond market dynamics

• Equity markets have no impact on bond markets

• Bond markets are independent of equity market changes