An upside-down debate

The Fed surprised markets this week, with sentiment far more dovish than investors had expected. To some, this suggests that the credit cycle still has further to go. Others are weary of the Fed’s shift, believing that the Fed sees weaker economic conditions ahead. If global bond yields are any indication, the latter group is on to something. DM yield curves have been flattening for some time, but countries whose economies are more tied to global growth, for example, Canada, Japan and Australia, have seen their yield curves begin to flirt with inversion.




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