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‘Monstrous’ Bond Rally Could Reverse Near-Term, Nomura’s McElligott Says. Here’s Why…
In December, Nomura's Charlie McElligott recommended fading the Q4 reflation euphoria headed into January as part of a 1-month price reversal strategy.
Suffice to say that played out in dramatic fashion.
Part and parcel of that call was a view that the Q4 rise in yields and concurrent bear-steepening occasioned by ostensible improvements in the prospects for global growth would at least partially reverse in January - if for no other reason than the reflation trade had gotten ahead of itself ju
Even if the net effect is to slow growth, isn’t there a chance that the effect of a pandemic will be inflationary rather than deflationary? Overall demand and GDP will drop. But if the effects of the supply chain disruption are greater than the loss of demand, might we see consumers pay more for goods because of supply constraints?