Equities markets around the world look to be in fine fettle, with the US sharemarket just a shade below its record high and the New Zealand market just a couple of hundred points shy of its all-time record.
US President Donald Trump's plan to cut the corporate tax rate from 35 per cent to 15 per cent to speed up growth in the US economy has largely been behind Wall St's bull run since his election last year, however, far from the hoopla of Wall Street, the US bond market is telling a different story.
As Trump nears the end of his much-vaunted first 100 days in office, and with his plan to redesign the healthcare system lying in tatters, the pressure is on for the new President to make a difference.
Since the election in November, the US 10-year bond yield went from 1.6 per cent to 2.6 per cent on the so called "reflation" trade - based on expectations that Trump's ambitious economic plans would be inflationary.
In recent weeks, the bond market has been more circumspect on inflation, with the yield dropping as low as to 2.15 per cent.
It appears the equities markets have bought in to Trump's promises of renewed growth for the world's biggest economy, while the bond market is having second thoughts.
"That's one way to look at it," says Christian Hawkesby, head of fixed interest at Harbour Asset Management.
"And typically, the bond market does tend to be more sceptical in looking for the downside in these scenarios while the equity market is more upbeat," Hawkesby says.
It's not unusual for these two markets to be a loggerheads.
"By their nature, equities have more exposure to upside and downside, whereas bonds markets tend to protect the downside, primarily," he says.
"These discrepancies [between the two markets] do happen and the bond market tends to take a more pessimistic view, so it's not uncommon."
Hawkesby says the messages given off by both markets can be difficult to disentangle, particularly in light of the level of pump priming from central banks that has gone on around the world since the Global Financial Crisis.
"Often when the outlook becomes a little less certain and bond yields start to fall, equities markets can take comfort that central bank stimulus might be on tap for longer, so there is an element of that as well," he says.
"If a bond market is taking a more bleak view of the outlook, interest rates can stay a bit lower for longer than otherwise and tends to help financial markets more broadly," he said.
Matt Goodson, managing director at Salt Funds Management, says financial markets are trying to come to terms with whether or not US core inflation is about to take off.
"So I think the bond market is in a range," Goodson says. "But for the equities markets it's onwards and upwards."
A2 ON A ROLL
A2 Milk shares continued on their record-breaking run after the dairy company raised its annual revenue guidance following better-than-expected sales in the third quarter. The stock closed at $3.53 yesterday, up 95 per cent from where it was this time last year.
The Auckland-based, Sydney-headquartered company received another boost to its share price this week when it forecast revenue of $525 million in the year ending June 30, up from $352.8m a year earlier. A2 generated sales of $388m in the nine months ended March 31, with third-quarter infant formula sales exceeding expectations.
Demand has been particularly strong in Australia, but also through the cross-border e-commerce channel into China. A big part of a2's success has been its ability to deal in the unofficial "daigou" trade channels into China - a feat that has eluded many of its competitors in the infant formula space.
Shares in the Warehouse have lost about a third of their value since the company advised the market in late December that its earnings were under pressure. The stock closed yesterday at $2.10, down from $3.12 just before the update.
In January the company announced cost-cutting measures and changes to its business model.
In March, its adjusted net profit after tax result for the six months ended January 29 was $39.7m, down 12.9 per cent on the previous year.
The company expects its second-half performance to be marginally below that of the previous year, and for full-year adjusted profit to be between $54m and $58m, representing a 10 to 15 per cent profit decline year on year.
Exchange traded funds (ETFs) have taken off around the world. Now there is an ETF for ETFs.
ETF Industry Exposure & Financial Services ETF (TETF) started trading in the US last week, providing investors with a single point of access to the companies driving and participating in the growth of the exchange traded funds industry.
"TETF will seek to track, before fees and expenses, the price and yield performance of the Toroso ETF Industry Index, which is designed to provide exposure to the publicly traded companies that derive revenue from the ETF industry," the fund said.