Wall Street’s new fear is that the economy has already peaked

Investment strategists are starting to consider a new bearish scenario: the economy has already hit its speed limit.

With the ferocious spread of Covid-19’s delta variant and central banks already talking about tighter monetary policy to bring inflation under control, there’s a growing sense of worry that financial markets have become too optimistic.

The shift in narrative was evident across assets on Monday. S&P 500 futures lost 1% and small-caps took a beating. In Europe, the main stock benchmark sank more than 2% with the most severe losses in energy, banks and travel companies. Treasuries rallied, with the 10-year yield sliding to 1.23%.

“Peak growth is starting

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