Treasuries & Equities Diverge, LEIs Turn Negative, and Coronavirus Infects the Markets

Equities and Treasuries are sending different signals these days, with treasury yields painting a grimmer picture than the ever-surging S&P 500. The often synchronous measures started to diverge in early 2019 and the gap between them has continued to grow since. Which do you think is more indicative of our current economic state? Many may say treasuries, given that the Conference Board Leading Economic Index (LEI) just turned negative for the first time this cycle, but other indicators have us feeling confident the loss will be fairly short lived. Economic measures will have to persevere through the Coronavirus outbreak though. While there have been some holdouts and even some that have gotten a boost (gold just hit multi-year highs), many measures including bond yields and commodities are clearly suffering under the weight of the pandemic. Could these worsening economic conditions in China, and the renminbi’s drop in particular, threaten the still-drying ink on the U.S./China phase one trade deal? Check out the charts to draw your own conclusions!