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Let’s begin with the excellent Michael Hartnett at BofA.
The Biggest Picture: high core inflation (Chart 2) + low unemployment + negative real policy rates; yet almost all central banks on hold/close to end of rate hike cycle thus “locking in” high inflation (as is trajectory of government spending, deficits & debt).
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The Price is Right: best encapsulation of “there will be soft landing and 150bps of rate cuts” narrative is drum-tight corporate bond spreads; best tell that “sell the last rate hike” strategy correct…higher unemployment and higher credit spreads; note 3rd auto loan event this week (U.S. Auto Sales) as US credit extension slowly switches off.
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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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