Searching For Equilibrium
Equity markets continue to adjust to higher rates, higher inflation - and now new levels of Treasury bond issuance.
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The Magical Mystery Tour Continues
Equities markets right now are rebasing around higher interest rates, higher inflation, and now an increased rate of Treasury debt issuance. Equities were doing just fine under what now seems like the ancient regime of low inflation, low interest rates, low tariffs and increasing globalization; and they are doing fine under the current environment with higher inflation, higher rates, tariffs on the rise and globalization firmly in the rear view mirror. The transition phase in 2022, featuring rate hikes and a general reduction in the provision of federal liquidity, was brutal; the new normal seems just fine. Right now the market is searching for its new base levels in this environment.
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