Forward Guidance; US10Y & USD/JPY; Yield Curve Inversion; Widening Bond Spreads.

2 years ago

Central banks do away with forward guidance; switch to a data-dependent approach as economic growth slows.

Market sees the Fed as turning dovish — Rates go lower — USD/JPY falls aggressively.

US10Y trades at parity with US03M — Curve inverting at lower and lower tenors. 

Russia fears, inflation, and energy crisis weigh on Euro/European nations — Bond spreads widen — Risk and uncertainty drive investors to safer assets.

Inflation-adjusted returns fall with risk-free rate falling — Bonds become less attractive — Investors seek higher returns — Risk assets rally.

Two competing camps: inflationistas and recessionistas — Price stability vs. growth.

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