That U.S. stocks were able to erase their Brexit trauma and pull within inches of a record Friday was impressive enough. That they did it on a day bonds yields were flirting with all-time lows was unprecedented.

Shares tracked by the S&P 500 Index briefly rose above a closing high that has stood for 13 months, helped along by the strongestemployment report since October. At the same time, yields on 10-year Treasuries slid within mere basis points of their all-time intraday low set this week.

It isn’t supposed to happen that way -- in fact, it never has. At no time in history have government bonds and U.S. equities, generally viewed as risk-on/risk-off complements, ended the same trading session this close to their respective records, according to data compiled by Bloomberg.

That it’s happening now is testament to the forces splintering sentiment in markets fixated on the pace of global growth and Federal Reserve policy. Stocks have been on a particularly violent roller coaster, erasing two 10 percent corrections in 10 months and restoring $1.4 trillion lost in the Brexit aftermath in just eight sessions.

“The stock market and bond market are expressing very different opinions,” said Jack Ablin, the Chicago-based chief investment officer of BMO Private Bank, which oversees about $66 billion. “It seems, at least on the surface, to be incongruous. Obviously I’m happy for the bulls, but I get the sense that there’s something dysfunctional going on.”

David Fuller's view

The only way I can rationalise this is to say that investors from all over the world want to be in US assets.  No to be frivolous but US markets are winning the global beauty contest.  All the more remarkable with a political system that has enjoyed better days and insane gun laws for a developed country. 

My other point is thank heavens for technical analysis.  Provided we have the humility to look at price trends rather than tell markets what to do, they will at least show us where the big money is flowing, in moves which can be as emotional as they are logical. 

We should have a look at the US stock market’s most important index to see the nature of this rally.  The S&P 500, which Eoin also discusses below, has a schizophrenic pattern since 2H 2014.  It is also close to a new all-time high, so what is going on among its components? 

Bloomberg’s MRR function shows the top-10 shares year to date (YTD) and also the worst 10 performers.  Resources lead the top performers, led by Newmont Mining Corp.  If we look at Bloomberg’s GRR function showing groups, Golds lead, followed by Diversified Metals and Minerals.  Lastly, we know from Eoin’s reports that many S&P Autonomies, such as Amazon are back in favour.

My conclusion? These look like late-in-the-cycle developments, as I have said before.  There is money to be made out there, or unfortunately lost just as easily.  The inform bets have been in resources since the beginning of the year.  I am sticking with them but not going overboard.