What do the bears that were right say comes next?

First up, Michael Hartnett at BofA.

The Biggest Picture: 3rd Great Bond Bear Market thus far a doozy (Chart 2)…2022 global govt bond losses on course for worse since 1949 (Marshall Plan), 1931 (Credit-Anstalt), 1920 (Treaty of Versailles); bond crash threatens credit events & liquidation of world’s most crowded trades…long US$, long US tech, long private equity (-47% from highs, see Chart 3)…true capitulation is when investors sell what they love & own.

The Price is Right: since Aug 1st US yields +110bps, UK yields +123bps (fastest rise since’94-Chart 5), German bund yields +87bps (fastest since‘90), French OATs +83bps(fastest since‘94); yield surge driven by inflation (German PPI +46%), central banks (~300 rate hikes past 12 months), but also fiscal deficit given new era of govt bailouts in every crisis + worsening geopolitics = more military spend (war is inflationary).

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.