from a mark-to-market perspective - this is because long-dated fixed income instruments have more duration and they are way more sensitive to changes in interest rates.
But now look at today: US nominal growth is falling and yet markets are staging a prolonged bear steepening. Very similar macro regimes with below-trend growth but recessions failing to materialize and markets pushing a bear steepening regime as people become convinced that ‘’economies can handle higher rates’’ were seen in:In all three cases above rapid late-cycle bear steepening trends marked the end of the ‘’this time is different’’ experiment and ended up causing severe distress to economies or markets .
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