Bonds Are Great Again
After being in the bear camp, we have become bond bulls. Many investors have concluded that US monetary policy is not yet restrictive because employment has remained resilient. This is fallacious reasoning. Not only does it ignore the fact that monetary policy operates with long lags, but it also overlooks the fact that falling labor demand will mainly translate into lower job openings and slower wage growth when the economy is near full employment, as has been the case for the past few years.
