Harr's view: Why markets are not disconnected from fundamentals

Historically, it is not unusual in a crisis that risky assets turn before data rebound. However, what is unusual is the speed of the recovery in US equities. But this is also a very different crisis as the economic rebound is much faster than during previous crises.
Theoretically and empirically, rising expected future growth rates will lead to stronger equities and tighter credit spreads today.
The lack of an effect on US stocks of the second wave of the virus reflects that it has not influenced 2021 growth expectations.
The underperformance of the NOK vs. the SEK during the crisis is influenced by the relative developments in real interest rates and stock markets in the two countries.

Danske Research Team Danske Bank A/S

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Danske Research Team

Danske Bank A/S

Research is part of Danske Bank Markets and operate as Danske Bank's research department. The department monitors financial markets and economic trends of relevance to Danske Bank Markets and its clients.

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