Following on this mornings update — specifically DB note on how it’s different this time noting,
… Personal view of this author is given how incredibly well behaved the bond market has been for the many reasons we highlighted last year, there is scope for the Fed to initiate QT as soon as mid-year …
Goldilocks out with a note of their own — NOT specifically about realz but rather something titled as if it were to be an episode of the new Boba Fett series,
One excerpt of THE NOTE which was interesting to these eyeballs,
… Given our view that this stems from supply/demand distortions rather than from economic fundamentals, we believe being short December 2023 Eurodollars offers some asymmetry. If upside inflation risks are realized and persist into later this year, markets will likely price the need for more Fed tightening or simply require more risk premium. If, on the other hand, inflation normalizes in line with our economists’ base case scenario, we would still see at least the five cumulative hikes currently priced given what we believe will be tight labor markets and an economy operating slightly above potential. Further, by keeping the shorts in nominal rather than real yield space, investors could avoid taking a strong view on how aggressively the Fed may respond to realized inflation outcomes. That said, the recent selloff has taken these forward yields close to the highs from last November, leaving the entry levels less compelling. We look to add these shorts on any material pullbacks….
It’s different this time OR it never really is …