My question is about timing.

Let's assume, as you do, that we are in a secular inflation.

Let's also assume that the 2022 rate hikes will impact the economy with the usual lag.

This means, at some point, higher unemployment, which is what the Fed is apparently looking for.

You must be assuming either (or both);

1. high number of boomer retirees and low immigration would force the Fed to raise much higher to achieve their desired impact on labour and inflation


2. politically expedient fiscal stimulus will soften the blow and force the Fed to raise further.

Or, they may slow/stop and somehow achieve the miraculous soft landing.

However, in case they do achieve their desired outcome and cause a rise in unemployment, this may get sufficiently out of hand to convince them to, yes, 'pivot', with a result of a temporary drop in yields before inflation takes hold again - which is what I think the market is betting on.

Both you and the market may be right - but at different points in the future?

So when you publish your position, are you talking about the long term trend or a tactical trade?

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Hi. Do you not think the recent action of TLT is simple short covering that may have been aided by trnd traders hoping aboard as year ends?

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Coupled with this, it would be interesting to hear your no recession thesis too.

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Hi Russell, thanks for the update. What do you make of: 1) the net short position of of non-commercials in USTs according to COT reports and 2) the decline in the FAO food price index (https://www.fao.org/worldfoodsituation/foodpricesindex/en/) and most food commodity price indices? I don't have a lot of experience interpreting these, but they seem to run counter to your thesis, at least in the short run? Like I said before don't disagree with your long-term secular thesis but unsure about how it plays out in the next 6 to 12 months.

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Phew I was beginning to worry. Was an interesting Russel Napier interview (from April) highlighting that Long end Bonds could be pushed down the markets throats. Ie political influence could be brought to bare - podcast was Behind the Balance Sheet (Stephen Clapham)

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