Tinder Box Awaiting a Spark? TLT vs. USO Reversion The lowest level of US public debt vs. stock-market capitalization in about 20 years, and the highest measure of crude oil vs. Treasury bonds in roughly a decade, may suggest elevated reversion risk. At 2x on June 5, the ratio of US stock-market cap-to-Treasury total public debt outstanding was last matched in 4Q07. The last time the iShares 20+ Year Treasury Bond ETF (TLT) fell at a similar velocity as this year vs. the United States Oil Fund LP (USO) was in 1H08. What's notably different today is US energy dominance. The shift to the world's largest energy producer and a net exporter is a significant headwind for prices and USO. The stocks-to-debt ratio has rebounded to a roughly two-decade high, but vs. GDP, the US stock market is the most elevated in about a century. A bit of reversion could be deflationary and buoy TLT. Full report on the Bloomberg here: https://blinks.bloomberg.com/news/stories/tfy6l8n3n0cl {BI COMD} #crudeoil #bonds #stockmarket #ETFs @markets(Mike McGlone)