Summers Sees 'Tumult' in 2023 With Reckoning for Bond Market
Comment of the Day

January 06 2023

Commentary by Eoin Treacy

Summers Sees 'Tumult' in 2023 With Reckoning for Bond Market

This article from Bloomberg may be of interest to subscribers. Here is a section: 

“I suspect tumult” for markets in 2023, Summers told Bloomberg Television’s “Wall Street Week” with David Westin. “This is going to be remembered as a ‘V’ year when we recognized that we were headed into a different kind of financial era, with different kinds of interest-rate patterns.” 

Eoin Treacy's view

In every other instance where quantitative tightening has been attempted bonds yields go up first. That is fuelled by fears central bank selling of bonds will crowd out other investors which pushes down prices. That process lasts for several months, then yields come back down. The collapse in yields is driven by rising deflationary fears as liquidity is drained out of the economy.

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