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Michale Hartnett at BofA with his latest. He is still bearish.
Tale of the Tape: inflation + budget deficits = higher rates…335 rate hikes past 2 years (record 35 in Sept’22)…collapse in stock of global negatively yielding debt to $1.4tn ($18.4tn peak 2 years ago–Chart 3)…new highs in UST 10-year yield (4.3%).
The Price is Right: UST2-year yield now 280bp higher than SPX dividend yield, widest since ’07 (Chart4); investor flooding to short-duration bonds…equity risk is this continues via rotation from stocks; bull case is no new highs in US$ signals monetary policy shift from Quantitative Tightening to”Quantitative Tinkering”.
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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.
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