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2026-02-16 15:03:55
[Capital Economics: Strong US Data but Unsustainable Market Panic; Stocks, Bonds, and Currency Expected to Rebound] ⑴ In a report, Capital Economics economists Jonas Goltermann and Thomas Mathews noted that the disconnect between strong US economic data and panicked US financial markets is unlikely to be sustained. They expect a rebound in US stocks, Treasury yields, and the dollar. ⑵ Economists say the recent decline in US Treasury yields is hard to reconcile with January's labor market and inflation data. The former was unexpectedly strong, while the latter was not as weak as the market reaction suggested. ⑶ More broadly, the US economy appears to have had a good start to 2026, with most data exceeding consensus expectations, "and we expect this to continue in the coming months." They point out that this typically leads to rising yields, not falling them. ⑷ From a market logic perspective, Capital Economics' view points to a mismatch between current asset prices and macroeconomic fundamentals. If subsequent data continues to validate economic resilience, the market will have to repric, pushing yields and the dollar higher. (5) In the coming months, attention should be paid to whether the US economic data continues to be strong, especially whether employment and inflation indicators can continue to exceed expectations. This will determine when the current disconnect will be broken and the strength of the rebound.
