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Rates Spark: the (flatter) shape of things to come
A gloomy view of the world is something that is more familiar to interest rate market participants than others. Yield curves have been pricing a dismal outlook for growth and inflation ever since their bull-flattening accelerated in July of this year. What is new is that other market are giving signs to coming around this view of the world. Even with Covid-19 cases rising across the world, the tension with still-healthy economic data is striking. This being said, markets are forward-looking and prone to overshooting what would normally be expected from new information. We think this is what is happening now. A ... (full story)