Traders work on the floor at the New York Stock Exchange.
Brendan McDermid | Reuters
A truce between the U.S. and China has convinced Barclays that a market “mini bubble” is looming.
With the G-20 outcome fueling optimism for an eventual trade deal, the stage is almost set for a market “melt-up” as Barclays now sees a 65% chance the S&P 500 will rip 10% higher from here.
A melt-up or mini bubble is considered a sharp move higher driven by investors late to the game looking to get in on a momentum shift. It’s often a sign of a late-stage bull market.
“After the truce in the U.S.-China trade war post the G-20 meeting in Osaka, the ‘melt-up’ scenario … is now our highest probability outcome,” Maneesh Deshpande, head of equity derivatives strategy at Barclays, said in a note Wednesday.”
The cease-fire between the world’s two largest economies over the weekend has fanned the risk-on sentiment in the market, sending the S&P 500 to new all-time highs. But for the market to rally further,…