Negative Real Rates Point To Weaker S&P 500

Over the past 5 years, there has been a relatively high correlation between the S&P 500 and real interest rates, as the chart illustrates. Indeed, real rates appear to have been a useful leading indicator.

Our current era is one of unusual market divergences, to which we can add that of the S&P and real rates.

The chart suggests that we can expect stock market weakness. If so, the ultimate impact of this divergence on investors will be a function of the prospects for both the S&P 500 and interest rates. The potential investment opportunities implied by this divergence are significant.

The recently published March issue of the Global Investment Letter (GIL) includes an update on our S&P 500 strategy as well as a lengthy discussion of our expectations for interest rates, as well as our monthly update on major global markets and our investment positions.

If you found this post of interest, you’ll find the GIL of value. To view free sample issues and to receive our weekly investment comment please visit: https://www.globalinvestmentletter.com/sample-issue/