Budget Hype - Tepid Growth. Updates: TA, RPI, HLP, GEI, AW, Preferred Shares
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The bond market is either astute or asleep; yields on average have been languishing in the mid 2% range for the past five years. This is the longest period of record low volatility for anytime since 1962, a period of 55 years.
The next period of lowest volatility was in the 4 years leading up to the Global Financial Crisis when yields ranged from 3.6% to 5%. Following the Global Financial Crisis, US 10 year bond yields dropped from the lower 5% range to as low as 1.4% in mid-2012. Since then yields have been range bound in the mid 2% range.
Inflation remains constrained; labour market tightness is having little impact. Economic growth remains constrained despite the big tax cuts promised in the US. This week's economic comments track interest rate history, and the waning potential for rate increases, even with all the fiscal policy hype coming out of Washington.
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