Every day in our Morning Lineup, we provide a technical snapshot of the market looking at various metrics. One chart we show is the relative strength of stocks (S&P 500) versus bonds (US Treasury Long Bond Future) over the trailing 12 months (chart below). Whenever the line is in the green area, it indicates that stocks are outperforming bonds relative to the start date, while readings in the red zone indicate bonds outperforming stocks. What stood out about the chart in this morning’s report was the fact that relative to one year ago (4/1 close), stocks have been outperforming bonds every day since. Sure, there have been periods in between where bonds outperformed stocks (falling line), but from a longer-term perspective, it has been about as perfect a year for stocks relative to bonds as you could imagine.
The chart below shows the performance of both asset classes individually over the last year. If you think the divide between political parties in the US has ripped wider, it has nothing on the growing divide between stocks and bonds. While the S&P 500 is up over 50%, the US Treasury Long Bond Future is down 14%. If we had to bet on which divide will start to narrow sooner, is there anything closer to a sure thing than taking the stock vs bond divide over the Democrat vs Republican divide? Click here to view Bespoke’s premium membership options for our best research available.