What does the Bond rally signal?
In this instance, the rally is linked to the belief [in the Bond market] that the Fed has decided to pause, and not raise rates further.
This is due to;
*Falling or stable PPI
*Falling or stable CPI
Thus they have inferred that inflationary pressures have stabilised currently.
Due to the fluctuating inversion between short & longer term rates, there is concern that there may well be a recession, due in part to the history of the Fed "overshooting" on rate rises.
Thus, there may well be a return to "falling rates" if in point of fact a recession is triggered.
Whether this is actually the case, is quite another matter, and subject to wide differences of opinion.
jog on
d998
