What’s the Bond Market Telling Us?

It’s clearly not a good thing that the Commerce Department reported a second consecutive quarter of negative growth, with U.S. gross domestic product declining at an annualized rate of 0.9% in the second quarter. But are we in recession? Following the May meeting of the Federal Open Market Committee, George Goncalves forecast back-to-back 50-basis-point rate hikes in June and July, warning the Federal Reserve could “miscalibrate and push us over the edge.” Well, we got 75 and 75. When will tightening financial conditions impact the economy and markets in a way that gets the Federal Reserve’s attention? And where can we look for such a signal? Goncalves, the head of U.S. macro strategy at MUFG, joins Real Vision’s Maggie Lake to talk about the journey from inflation risk to rate risk to credit risk. We also hear from Jim Bianco about what’s happening in perhaps the most critical area of global finance: “Things have already broken the bond market.”

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What’s the Bond Market Telling Us?

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[geoffreymak]

The company I work at ship a lot of stuff to customers. Funny thing is, ups increased our price a few months ago, but we haven’t increased our price to our customers yet because of some existing contract. Guess what… we will renegotiate a new contract to pass the cost on. So tell me, has inflation peaked…

[JorgeOrpinel]

re DXY. That chart seems to show that the dollar goes up a lot AFTER crises, not that it causes them.

[musingsbymarco]

Interesting point on the recurrent inflation waves in the 70's and the producers choosing to pass on all the costs or not and the effect on wages. That's also when we went off the gold standard was it not? Different times can complicate analysis.

Stagflation is not a great place to sit at. Keep an eye out for the next inflation numbers. I wouldn't be surprised if measuring methods begin to change to help facilitate a peak.

[tomyshaw]

What about people's spending habits, almost seems that people don't see how budgets has changed, that change caused the inflation.

[tencog]

A lot of indecision and speculation in the current environment. The sideways market is plausible imo.

[irszgatti]

the market has another 30-40% to fall yet. this is a slight reprieve.

[velezable]

The catalyst for the upside is short squeeze in an illiquid summer market. The birds are flocking away from the predator, but he's already picked his mark. 🦅

[edreeves]

RP is hard to stomach. Everyone else is fine. Just cringy though.