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Macro Forces Underpin Dollar, Equities and Yields
The major US equity indices reached record highs before the weekend even if the Dow 20000 level was just out of reach. Following news of a stronger than expected rise in hourly earnings, US yields rose, and after an initial stumble, the dollar recovered on closed on its highs. The underlying narrative that explains and justifies these broad trends stands on four legs. First, that the US economy is expanding at a sufficient clip to spur some price pressures, including, as we saw in the employment report, hourly earnings. (2.9% year-over-year, a new cyclical high, though below past recoveries and expansion levels). ... (full story)