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Confidence in the post-pandemic recovery

After several months of uninterrupted equity returns and strengthening economic data, the “goldilocks” backdrop is starting to fade with many asset classes now sending divergent signals. Since March, the U.S. treasury curve has started to flatten with the 10-year yield sinking from 1.75% to below 1.30%, raising concerns over the durability of the economic recovery. Historically bonds have done a much better job of forecasting economic malaise, but in this situation, we do not believe that bonds are signaling an ominous ending to the fresh recovery. Rather, we think yields are reflecting near-term uncertainty (Delta variant) but largely responding to the sheer volume of liquidity that abounds across global markets. In this Outlook, we share our thoughts on the overall health of the U.S. economy, the demand for U.S. financial assets, and our views on individual asset classes. Please reach out to your Edge financial advisor for questions.