Bonds Signaling a Painful Downturn: Invesco's Waldner

The transcript discusses Powell's commitment to fighting inflation through 2023, with potential relief in 2024. The bond market's reaction suggests significant economic tightening, as evidenced by the inversion of the yield curve. The analysis highlights the unchanged 30-year bond and the rise in the 2-year bond, indicating market expectations of aggressive tightening and its unclear impact on the economy and risky assets.

What is Powell's stance on inflation for 2023?

• He plans to reduce interest rates.

• He intends to continue fighting inflation.

• He will not take any action.

• He expects inflation to naturally decrease.

What does the bond market's inversion of the yield curve suggest?

• A stable economic outlook.

• A decrease in inflation.

• An expectation of economic growth.

• Potential economic pain ahead.

How has the bond market reacted to the surprise CPI number?

• The 2-year yield remained unchanged.

• The 30-year yield remained unchanged.

• The 2-year yield decreased.

• The 30-year yield increased significantly.

What is the market's expectation regarding monetary policy?

• Monetary policy will remain unchanged.

• There will be a loosening of monetary policy.

• There will be a significant tightening of monetary policy.

• Monetary policy will be relaxed.

What is unclear about the impact of tighter monetary policy?

• Its effect on employment rates.

• Its effect on inflation.

• Its effect on the bond market.

• Its effect on the economy and risky assets.