And The Best-Performing Asset Since The Fed Started Hiking Rates Is...

...Gold!

After all the concerns about interest-rate hikes curbing gold’s appeal, the metal has managed to retain its luster.

Since Dec. 15, 2015, a day before the Federal Reserve began its current cycle of U.S. rate increases, bullion has climbed 18%. The barbarous relic has outperformed the broadest measure of US stocks (NYSE composite) as the long-bond is unchanged since Dec 2015 and commodities plunging back after inflation hope fades.

As Bloomberg notes, non-interest-bearing gold is getting an added boost from speculation that the Fed will be slow to raise rates further, with 10-year Treasury yields near the lowest since November (below where they were at the start of the rate-hike campaign in 2015) and the yield curve has collapsed each time The Fed hiked rates...

 

Perhaps the yield curve is reflecting the post-China-Credit-Impulse collapse in US macro data (no matter how hard and fast economists cut estimates, it's still disappointing)...

 

But then again, there is a bigger divergence... between inflation and earnings expectations that could spell trouble for investors, according to a note by analysts at Strategas Research Partners.

As Bloomberg notes, while the U.S. Treasury curve has flattened, with 10-year yields falling, equity analysts are staying bullish on earnings growth.

“The factions are known to disagree from time to time, but are rarely both right supporting divergent views,” analysts led by Nicholas Bohnsack, wrote in a note to clients Thursday. “Stay tuned.”