This economy is clearly slowing>
Which economy, Brazil America, or Bully? There are two distinct US economies now.
"This economy is clearly slowing", does not equal lower bond yields in this environment. That's not what is causing this particular bond rally, it's just another Risklove rotation is all, and based on perceived words from the Wizard that pauses and cuts are on the way. In fact, I can't imagine a worse environment for notes and bonds than now, I'm extremely bearish on them, the rest of this year will be when they really blow up.
Here's what the environment will look like: Brazil America and Bully Wannabes (80-90% of the population, and 10-15% of the buying power) will continue to sink. Bully 10-20% of the population, and 85-90% of the buying power will continue to leverage inflation and excess demand, and parade around saying, "the economy is slowing, blah,blah, cut rates" . If the Fed responds to this with looser money than now (10% credit growth already), you will see oil at $100, and so on. Brazil America wil sink even more, and the gini coefficient will get even worse. Meanwhile China will increase prices for even more inflation effect. Soon the "markets" (effectively just central banks) will wake up and realize they may as well be holding Brazilian bonds, in fact that may be an insult to Brazil, by the time this is over. |
