The 10Y Treasuries rates on the secondary markets are now at 3.53%, which is lower than the 5%-5.25% rate that the markets expect the Fed to announce next week. It is as if investors were using all their cash to buy both Treasuries and equities. Hence a very weak US$ .
On the other hand, companies earnings expectations continue to slowly decrease week after week. Based on the Q1 (March 2023) earnings expectations, the uptrend will be limited to the December 2022 top.
However, based on the Q2 June 2023 earnings expectations, equities have room to reach $4300, the top of August 2022. That is of course if interest rates do not increase.
We can see below that money is still moving into Treasuries,
but also into gold,
into the largest equities,
but also into growth stocks
and also the small caps.
Even energy attracted money yesterday after CVX announced a very large corporate buyback.
The indicator below shows extreme buying exuberance that has surpassed passed levels.
As a matter of fact, we can see below that we did not reach such extreme buying activity since May 2009.
Conclusions:
Extreme buying exuberance just days before the Fed hikes interest rates is not when I would put new money in the markets.
