"Massive supply of government bonds, most especially in the US, has become a key, if not the key, explanation for rising yields via rising term-premia. It’s almost as if I have been transported back to the early 1980s when I started my career" -Albert Edwards
And just like that, the Fed's "higher for longer" mantra is dead. At least that's the view of many Wall Street strategists, not to mention the market, this morning after Powell's FOMC speech delivery ended up being much more dovish than many had feared, which when coupled with the Treasury's less aggressive refunding issuance, has led to today's furious rally... and also a new note from Albert Edwards, in which the SocGen strategist writes that with the Fed now out of the way, what really matters is 1) the massive US bond supply, and 2) the Bank of Japan (BoJ).
Needless to say, we agree with the first, having first pointed out yesterday that despite the modest miss in the refunding total ($112BN vs $114BN), the bigger picture is still, well, catastrophic.
