‘Normal’ Is A ‘Funny Concept,’ One Bank Reminds You

"Sell Treasurys and trust the expansion." So said Morgan Stanley's Andrew Sheets on July 18. I should emphasize that the note from which those half-dozen words were plucked was a good one. Be that as it may, the market wasn't in any mood to sell bonds or trust the expansion come Monday. Indeed, the bond rally accelerated dramatically, pushing 10-year yields in the US down another ~10bps (figure below). The risk-off optic from rates likely amplified already sour sentiment in equities. Wall S

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3 thoughts on “‘Normal’ Is A ‘Funny Concept,’ One Bank Reminds You

  1. Someone please explain why a recovery from 2020 is sustainable. We got the child tax credit, but most other safety-net programs are going away in 3Q, red-state governments are starting to backtrack on Medicaid expansion, businesses are reluctant to raise wages and will replace human capital with tech whenever and wherever they can, and the GOP/Trump death cult is determined to slow walk/strangle any federal fiscal response. It was a have/have-not economy before the pandemic; what has changed in the 14 mos since?

    1. The idea is this: Without a virus to worry about, a large part of the services sector will come back. But that’s it. We’re scaling back to slow growth and divergent economic fates.

      The US has always been able make conditions barely tolerable to workers and avoid wealth-redidtributive policies. That’s pretty sustainable. It’s also forte fortunate if you can cling to ownership.

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