As the coronavirus takes its devastating toll on the U.S. economy, financial pros are increasingly confounded by the markets.
The economy is in its worst shape since the early 20th century, and stocks are soaring. The U.S. government’s borrowing is expected to triple to a record $4.5 trillion this fiscal year, yet 10-year Treasury yields are close to historic lows.
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A report Thursday showed that U.S. jobless claims fell to 963,000 last week, the first weekly figure below 1 million since March. But in the topsy-turvy logic of financial markets, the improvement was seen as neutral or even negative – since it might relieve pressure on authorities to speed up more trillion-dollar stimulus packages.
“The good news may be bad news now,” Chris Gaffney, president of world markets at TIAA Bank, told Bloomberg News.
Bank of America analyst Athanasios Vamvakidis acknowledged last week in a report that it was hard to tell if the dollar’s recent slide in foreign-exchange markets was due to ebullience over easy Federal Reserve monetary policies – or fears that the U.S. currency might be at risk of losing its status as the dominant world currency.
What’s striking is that, through it all, crypto traders have stayed almost unequivocally bullish.
Bitcoin is up 64% in 2020, more than double the gains for record-breaking gold. Prices for ether, the native token of the Ethereum blockchain, have tripled this year, thanks to the fast growth in decentralized finance, known as DeFi, and in digital “stablecoins” linked to U.S. dollars.
John Todaro, director of research at…