Quarterly Review and Outlook- Lacy Hunt

Lacy Hunt is the authority on bond markets and he concludes in this must read piece

Accordingly, monetary restraint is continuing to weigh on economic growth. Inflation, which fell below the Fed’s targets and most Wall Street forecasts, will remain on a downward path. These cyclical forces suggest that inflationary expectations should continue to fall this year and next as the economic growth rate weakens further. This means that a mild recession would push the real rate into negative territory. Thus, both determinants of the nominal long risk-free rate (i.e. the real rate and inflationary expectations) are directionally favorable for further interest rate declines, although the path will continue to remain volatile.

http://www.hoisington.com/pdf/HIM2019Q2NP.pdf

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