"Edwards pointed to the strength of US stocks despite rising bond yields, which have surged as investors see higher for longer interest rate policy from the Federal Reserve. The yield on the 10-year US Treasury recently passed a 16-year-high, climbing to around 4.768% on Tuesday.
And yet, US stocks have been relatively resilient all year. Despite hefty losses in August and September, the S&P 500 is still up 10% from levels in January."
"The equity market's current resilience in the face of rising bond yields reminds me very much of events in 1987, when equity investors' bullishness was eventually squashed," Edwards said in a note on Tuesday. "Just like in 1987, any hint of recession now would surely be a devastating blow to equities."
And yet, US stocks have been relatively resilient all year. Despite hefty losses in August and September, the S&P 500 is still up 10% from levels in January."
"The equity market's current resilience in the face of rising bond yields reminds me very much of events in 1987, when equity investors' bullishness was eventually squashed," Edwards said in a note on Tuesday. "Just like in 1987, any hint of recession now would surely be a devastating blow to equities."
"Never in my career have I witnessed such uncertainty about where we are in the economic cycle. Is that long promised recession still lurking around the corner or are we at the start of a new economic cycle," Edwards wrote. "
"The New York Fed has priced in a 61% possibility that the US will tip into recession by August 2024. Meanwhile, only 32% of individual investors think the chance of a 1987-style stock market crash over the next six months is less than 10% according to Yale's US Crash Confidence Index."
SOURCE:
https://markets.businessinsider.com/news/stocks/stock-market-crash-1987-recession-risk-us-economic-outlook-rates-2023-10
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