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‘It’s The Steepener, Stupid’, And Why A ‘Rogue’ Inflation Beat Is The Biggest Tail Risk
For all the focus this year on the steady grind flatter in the yield curve and what that might portend for the U.S. economy, it's worth noting (and we've mentioned this before), that steepening opens the door to volatility.
This is a point that tends to get lost in the proverbial shuffle as the curve flattens and everyone starts to talk about inversion and recessions. It's worth remembering that the February turmoil was accompanied by curve steepening.
Well, in his latest daily missive, Nomura
If the fundamental story remains the Fed seeking to reduce its balance sheet (and, with that, offer a workable QE/QT model for other central banks), then a “virtuous” domestic inflationary economy is essential, where money velocity can successfully respond to a shrinking money supply.
Unreasonable speculative investments and ponzi schemes need not apply…
the difference this time vs january is the absence of the giant ‘tail’ to wag the dog…..XIV et al.