The dominating themes in the fixed income world

Recent softer price indications from the US brought us back another year in terms of the battle between those who believed we were set for long-term secular stagnation and those who believed we were on a new reflationary path.

The reflationists were gaining ground as inflation data was showing signs of improvement from the second half of 2016 onward, followed by the excitement surrounding Trump fiscal expansionary and pro-growth policies. The markets and the Fed have seemed to be in agreement since the end of last year.  However, more recently, there has been a divergence in opinion. The market is seriously questioning the Fed's credibility. Mirabaud chief economist: No UK recession to come At the latest meeting, the Fed's hawkishness was evident as they perceive the current weak data to be temporary....