Look at the following set of indicators between Week 1 and Week 9 and then answe

Question

Look at the following set of indicators between Week 1 and Week 9 and then answer the questions below 10 year high-yield U.S. corporate bond 10 year U.S. Treasury bond yield Week 8 Week 1 6. I 3%-1.83% 7.29%-1.84% 10 year Treasury bond yield -2 year U.S. Treasury bond yield Week 8 Week 1 1.83%-0.51% 1.84%-0.52% S&P500 stock index Week 8 Week 1 2,067.55 1988.63 JPMorgan (stock price) Week 8 Week 1 S62.31 $62.01 Are the following statements true or false? 2.1. Between Week 8 and Week 1, the U.S. yield curve has inverted 2.2. Between Week 8 and Week 1, credit market investors have become more optimistic about the economic situation in general. 2.3. Between Week 8 and Week 1, has the stock price of PM over- or under-performed the broad stock market? Given what happened to credit spreads and the yield curve, does that make sense to you? Briefly explain

Explanation / Answer

Please find below the answers for your reference:-

2.1 - False, as yield curve movement is upwards and not downwards.

2.2 - True, since yield curve is moving upwards, it signifies positive economic outlook.

2.3 - The stock price of JPM has under-performed as the stock price has gotten marginally reduced. Bond price and yields have inverse relationship. Hence comparing the same with stock price makes no sense.

Hope the same is clarified.

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