Bond yields have been collapsing clear across the world. And if history is any guide, the rapid decline is a function of undeniable economic weakness.
Consider the correlation between bond yields and time-tested measures like the Institute for Supply Management's PMI. The 10-year U.S. Treasury yield tends to follow in the indicator's footsteps.
As the chart shows, waning economic growth and falling bond yields occurred in 2012 and 2016. During those periods, corporate earnings struggled immensely.
What about today? Not surprisingly, earnings growth (and margins) have decelerated significantly.
Expectations (Q2) for year-over-year earnings growth? -2%.