Current market strength and high valuations are sustained by a powerful, coordinated trifecta of global stimulus. Beyond traditional fiscal and monetary easing, a pro-risk shift in regulation provides a third, often overlooked, tailwind for corporate activity and risk-taking across major economies.
Despite investor fears fueled by geopolitics and rising gold prices, key market indicators—inflation expectations, rate volatility, USD valuation, and credit spreads—show surprising stability. This suggests the underlying economic foundation is stronger than negative sentiment implies, supporting a positive market outlook for now.
To assess true macroeconomic stability amid market noise, investors should monitor four specific signposts: inflation expectations, government debt volatility, U.S. dollar valuation, and credit market stress. As long as these core indicators remain calm, the fundamental case for market strength holds.