The US is running a split-screen economy. Labour has slowed enough to make another hike risky, but inflation is too high for the Fed to sound relaxed. Private demand and corporate profits remain firm, while the household is losing momentum. The market is therefore not trading recession, but it is not trading a comfortable soft landing either. It is trading prolonged restriction, a fragile consumer and a long bond that is increasingly setting financial conditions itself. Jackson Hole begins today, with Kevin Warsh delivering his keynote on Friday.
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