Better (Be) Different

That word again: “sustained.” What’s, more importantly, absent is any explanation for what today – unlike just a few years ago – these central bank officials are willing to admit. Given some cover under COVID, still, someone might ask Brainerd or any of them to venture some guess as to why there had been that whole “past decade of underperformance” and therefore how it “will require patience” moving forward.

They always just skip over that part.

This is no small thing and it goes a long way, I believe, as to what we see in global bonds never mind all the big numbers and improvements in all the other things.

In other words, that they can’t really figure out (if they had and came up with a good explanation, officials would certainly have gone out of their way to blast it out there already) what really had happened last decade and this more than casts a pall on the likely circumstances of the coming one. If you don’t really know what went wrong before COVID, can’t say much about if it’s still wrong.

How do we know that once the pandemic actually does end, with that end almost in sight, the economy beyond corona is actually going to be robust in a meaningful sense (and not just written up that way in the media like it was before when all that inflation had gone missing)? Rebounding up from a very low trough in 2020 is not the same thing at all; it’s just being talked about that way by all the same people who tried to sell you on Recovery 2010s.

This inflation stuff isn’t trivial nor is it really about consumer prices. It’s actually about recovery and while the bond market is pricing substantial economic improvement that – so far – is coming up way, way short of the finish line. In that sense, same thing as before.

At some point, you’d think authorities and commentators would like to figure out why; starting with how it might be that bond yields in all these different places so often do the same things at the same times no matter their geographic as well as other clear differences.

The global reflation selloff in January and February was confirmation, I think, of what we’re seeing now; pandemic done. Yet still, remains the far more critical and unanswered question: then what? The bond market’s current guess is that it just might be different in the 2020s when all gets said and done pandemic-wise, but more likely than not it won’t be better different. 

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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