A sell-off in Treasuries continued overnight before paring losses, with long-term yields pushed to highs unseen since the global financial crisis.
“Over the longer run… this move itself has the power to sow the seeds of his own downfall. We have been calling for a recession for some time, like everybody, but we’re still sticking to our guns on that front and the backup in long dated yields, paradoxically, only strengthens our confidence there because it will increase resulting in inevitable tightening of financial conditions which will weigh on demand going forward.
“At some point this very fast and pronounced monetary policy tightening that we’ve had pretty much in every country around the world is going to have an impact on the underlying economy. In that scenario you want to be cautious and lightly positioned with regard to risky assets.”“Right now there is huge momentum behind the sell off because the positioning in the market has been wrong.
“I think that it is technical, it is people feeling too much pain and stopping positions, because its an asset class on which they have been wrong.”
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