Tom Lee, head of research at Fundstrat, is well-known as a stock-market bull. And here’s one chart that he just can’t get his around.
It’s of 10-year yields around the world. The yield in the U.S. BX:TMUBMUSD10Y is higher than even Greece’s BX:TMBMKGR-10Y, which admittedly has made strides in reducing its debt burden but still has a worse credit rating than the U.S. Lee appended further “wut” tags to the bonds of Spain BX:TMBMKES-10Y, Germany BX:TMBMKDE-10Y and Japan BX:TMBMKJP-10Y.
Inflation is higher in Germany, Spain and Greece than in the U.S., and Japan isn’t far behind. Lee adds that the U.S. also doesn’t have a currency that is riskier to justify the yield difference. “Maybe this is another example of how there’s been a lot of momentum pushing yields higher, but it may be divorced from fundamentals,” he said in a video message.There are of course other reasons why U.S. yields are higher. In Japan’s case, the central bank there is still buying debt, while the Federal Reserve is selling. Germany has a much smaller debt burden relative to the size of its economy than the U.S.