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Hoisington latest comments


Was wondering what are your thoughts on this

Been my reliable Bonds view for a while...

Contrary to the conventional wisdom,
disinflation is more likely than accelerating
inflation. Since prices deflated in the second
quarter of 2020, the annual inflation rate will
move transitorily higher. Once these base
effects are exhausted, cyclical, structural,
and monetary considerations suggest that the
inflation rate will moderate lower by year end
and will undershoot the Fed Reserve’s target of
2%. The inflationary psychosis that has gripped
the bond market will fade away in the face of
such persistent disinflation

Hi @nomis,

I think this is directionally accurate. You're about to get a bunch of high CPI readings due to base effects. Then the numbers become more challenging YoY and it will depend on how robust the recovery and wage growth remains. I am probably a little more bearish on rates than Hoisington is. I think rates could easily stay above 2% for a while as the recovery firms. But yeah, the general view that high inflation isn't sustained is the right view IMO.

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