Stocks Living The Dream, Yen Shines As Yields Retreat – Investing.com

Stocks Living The Dream, Yen Shines As Yields Retreat – Investing.com

US stocks remain at record highs, enabled by falling real yieldsDollar a touch softer amid rumors Brainard could replace PowellYen and gold enjoy more gains, sterling recovers despite risks

Euphoria in the air

Can anything stop the runaway train that is the US stock market? The S&P 500 closed at another record high on Monday, bringing its total gains for the year to a stunning 27%. Infrastructure spending, assurances from Fed officials that they won’t slam on the brakes too hard, and stellar earnings have all been cited as catalysts for the melt-up.

In reality, the drivers of this rally may be more arcane. Stock buybacks are on track to hit new records, real yields have fallen to the point where frothy valuations are more palatable, volume in call options has exploded, and momentum chasing algorithms have served as rocket fuel for everything else.

Even the Fed is worried about asset prices racing too far ahead of fundamentals. The central bank’s Financial Stability report was released yesterday and highlighted a range of risks, from a liquidity crunch in China spilling over into the global financial system to rising interest rates and surging inflation threatening elevated valuations.

All told, this seems like an