Dimon Says Prepare for 4% Yields – Bloomberg

Wow!  It sounds like Jamie read our recent post,  Prepare For Much Higher Long-Term Rates.   Nah, we are just on the same page.

He speculates the yield curve will not invert as it did in the last tightening cycle; long-term rates will be “forced up” close to 4 percent as the Fed continues to tighten; the U.S. government has big issuance of new supply coming – $400 billion per quarter – and will be difficult to absorb; the Fed has stopped buying bonds; and foreign central banks will reverse their purchases of U.S. Treasuries.   Sound familiar?

May7_10year_Bloomberg

Do you see the inverse head and shoulders pattern?

Dimon Bullish On Economy

This is how his bullish economic scenario unfolds and normalization takes place but maybe not so bullish for financial assets.   We are less sanguine and not so sure the asset driven New Economy can handle, as well as Dimon seems to think, the market volatility that a 4 percent 10-year will bring.

Go to  2 minutes for the good stuff.   See here for article.

 

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