Bloomberg/Michael Mackenzie and Liz McCormick/6-25-2022
“Bond investors are torn about whether the recent pullback in yields — fueled by increasing fear of recession — marks an end to the worst Treasury bear market of the modern era, or just a pause.… The task has been rendered all the more complicated by Powell’s focus on tightening monetary policy until “compelling evidence” emerges of a pullback in inflation.”
USAGOLD note: The word “investors” used in this context looks like a misnomer. It should be replaced with the word “speculator.” A bond investor would hold the instrument to maturity, satisfied with the yield being paid. A speculator is betting the bond market will go up or down. Under those circumstances, the question of recession or inflation comes into play. These days with stagflation – a combination of the two – the most likely outcome betting on one or the other might be less than productive.
