Introduces topic of global bonds erasing gains due to stagflation fears, referencing Steven Major's writing, and asks what the stagflation scenario means for treasuries.
Host (Jon)
Steven Major
Reluctantly uses the term 'stagflation' as markets must price scenarios like central banks do. Notes the oil price situation has changed dramatically from January expectations of $60-70 to current supply blockages that will take time to ease.
Steven Major
Cautions against direct 1970s comparisons due to structural differences: US as major oil producer, older population, wealth inequality, and technology backdrop.
Steven Major
States the market is now pricing in significant stagflation risk, with probability weighting around 50% today versus less than 10% at start of year.
Steven Major
Analyzes where stagflation risk is priced in markets by examining inflation breakevens, different credit sectors, and global bonds.