Our analytical framework involves 3 different time horizons: Tactical (1-3 months trading outlook) Cyclical (6-12 months liquidity/growth outlook) Structural (2-3y+ outlook based on valuation, regime shifts, demographics etc). Today, for fixed income, all our cyclical indicators support buying dips on a 6m+ outlook. The only concern is that the short-term tactical trading context remains bearish and needs to clear up before a max long duration trade.
An inflation plateau will help to shift the market narrative from “inflation scare” to “recession scare”. This should be supportive for bonds, but not so much for equities.
My own indicators point all toward recession and lower equity markets, too. But I'm somewhat concerned that the ease of the inflation scare might lead to a strong rallye in equities, how probable would you see such a scenario?