If sustained:
- equity risk premia continues to narrow, leads to rotation out of equities into other assets
- long tech and utility stock performance was hit first last time
- bond market liquidity depletes… bid-offer spread widens
- housing market is pressured by mortgage spread widening
Seems like not enough buyers for Fed issuance… foreign and domestic demand is low (both retail and institutional).
+ plus Fed still engaged with QT
+ and even though US inflation print had a positive surprise (lower than feared)
What’s the call?