Meitav Warns US Market Strength Is Fragile Amid Bond Yield Surge
Meitav Investment House warns that strong US consumer data is temporary, driven by a narrowing group of AI stocks while the bond market faces severe risk.
Global capital markets are presenting a complex picture as US economic data hints at a temporary rise in consumer activity, yet Meitav Investment House warns this trend is unsustainable.
According to Meitav's weekly macroeconomic review, chief economist Alex Zbejinsky notes that the boost in US private consumption is temporary amid a weakening labor market, soaring financing costs, and a steady erosion of real household incomes. Meanwhile, core inflation remains stable, causing market expectations for a Fed rate hike in October to plunge from 70% to just 20%.
However, Meitav's primary concern lies in the bond market. Yields on long-term bonds continue to surge regardless of monetary expectations, reflecting a leap in risk premiums and a flight of traditional investors, which is already pressuring stock indices and tightening financial conditions.
Meitav emphasizes that the apparent stability of major US indices is an illusion driven almost exclusively by a narrow group of AI-related stocks. Beneath the surface, broad weakness persists as fewer than 45% of S&P 500 stocks posted recent gains, a level last seen in 2000. In Europe, a destabilized bond market raises systemic risks, and Meitav does not rule out future ECB intervention.
