Markets are still behaving as though several things can remain true at once. Economic growth can stay resilient, corporate earnings can keep rising, artificial intelligence can continue driving one of the largest investment booms in modern history, governments can continue running historically large deficits, oil can remain elevated and policymakers can prevent long-term borrowing costs from rising far enough to disrupt the system.

For the moment, that combination is holding together.

The S&P 500 remains close to record levels despite rene...