It’s 1994 Again: Why Albert Edwards Expects An Imminent “Bond Market Bloodbath”
- It’s 1994 Again: Why Albert Edwards Expects An Imminent “Bond Market Bloodbath”
by Tyler Durden, http://www.zerohedge.com
Following the Trump presidential victory, two prominent macro strategists have undergone a significant change in their outlook: while David Rosenberg, who started off with a deflationary, and bearish outlook, then flipped to inflationary (and bullish), has recently once more “mean-reverted” and expects a further drop in yields as deflationary forces return, his SocGen peer, Albert Edwards – while still expecting a deflationary “ice age” in the longer-run (in case there is any confusion, he expressly states “make no mistake. Unlike most in the markets, I remain a secular bond bull and do not think this 35 year long bull bond market is over”) now expects an imminent “bond rout” in the coming weeks as the Fed’s rate hike cycle leads to an aggressive selloff in short- as well as long-term rates. The result will be another “central bank-inspired recession”, which will lead to the convergence of yields on the 10Y US Treasury with Japanese and European bonds below zero, as the global deflationary ice age enters the final round.
Edwards’ summary of his current state of mind, just as the Fed is about to make (yet another) historic mistake, is – as usual – rather picturesque:
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