Todd Gordon, founder of Inside Edge Capital, argues that the current stock market breakout is not a false signal and should continue higher. His analysis focuses on the spread between the 2-year Treasury yield and the Fed funds rate, currently at 47 basis points, which is nearly 50% below the 69 basis point threshold observed in 2015 when the Fed last raised rates. According to him, the more reactive 2-year Treasury market is not signaling sufficient pressure to force the Federal Reserve to raise rates. The stock market has been trading in a tight range since mid-May, weighed down by geopolitical tensions, persistent inflationary pressures, and uncertainties surrounding AI capital expenditure spending.
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