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This depends upon the one grand assumption

The huge spike in yields witnessed over the last few weeks means the market is now predicting a recession next year. And no sitting President has been voted back into office while the economy is shrinking since 1900 with one exception.

It may not matter whether he begins delivering great speeches, or faces a weak Republican candidate – the bond markets have already killed Biden’s chances of a second term.

That assumption being that the bond markets are always right. They’re always influential, they movements have effects. But always right in their predictions? That’s a tought sell.

Markets are always right about what prices in markets are today. They’re efficient at processing the information about what prices should be today. They’re probably the bist looking glass we’ve got to peer into the future. But all predictions of all markets all the time are correct? That’s a tough sell there.

#Now, me, I hope Trump wins. On no ground other than that I entirely despise the current D (and soft R) establishment. As with 2016, it was despising Hillary that did it for me, not loving anyone else.

6 thoughts on “This depends upon the one grand assumption”

  1. That’s Fishi’s mob’s only hope of avoiding a total wipeout. That Sir Kneel’s bunch of wankers are hated more than his bunch of wankers…

  2. Given all the people that Donald Trump renders incoherent with rage, who could possibly not like him?

  3. Where are US sovereigns priced compared to US corporates, particularly Apple & Microsoft?

    Seems that during the previous shutdown palaver, US debt effectively went to a discount compared to those.

  4. There are $trillions sitting in US $ cash, just nobody wants long bonds because the regulation that drove them to buy bonds at ridiculously high prices is now driving them to sell 75% lower down. The Japanese can’t buy – hedging costs and their own mark to market problems – and funnily enough the Chinese aren’t too keen either. So that leaves the Fed, but they are in a stand off with the profligate politicians who plan ever larger maxing out the credit card. The Fed know that monetising the COVID policies caused the inflation so aren’t going to do it again…

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