The Bond Market’s Blind Faith in a Do-Nothing Fed

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Investors are betting that nothing much will happen in the economy or at the Fed. That’s a risky bet, writes Streetwise columnist James Mackintosh

Just three months after an embarrassing policy reversal by the Federal Reserve, investors are now sure they understand both what the central bank has planned and what will happen to inflation and the economy. In short: Nothing much.

There are legitimate questions to be asked about whether widespread pay rises might translate into inflation, whether the first-quarter slowdown could be an early warning of a recession and whether the Fed really will stay on hold all year. But the market isn’t asking any of them. Instead, complacency...

Source: News Formal (newsformal.com)

 

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Inflation would be good and wage growth could help brings us back to parity ; were so used to the economy being bad and we think the economy is actually strong. The economy is being propped up for the last ten years opposite of the 90's.

And if the Fed is correct that 2019 growth is 2.1% and 2020 is 2.0 or 1.9% - will investors still be bullish as debt skyrockets?

The bubble will soon burst.

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