Deflationary stagnation

Hartnett says: “Finally, perhaps the biggest pain trade is simply that US, Japanese and European growth falters and engenders deflation. Income inequality, new US immigration reform, the tech ‘jobocalypse’, excessive financial regulation all could conspire to keep growth and bond yields lower-than-forecast by consensus. Should the 10-year US Treasury yield fail to surpass 3 per cent by the end of Q1 then look for a reversal of the following popular pair trades: developed markets over emerging markets, high-yield over investment-grade and discretionary stocks over staples.”

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