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the problem is, the historical analogies -- France 1989, or Volcker 1981 onwards -- are wack. Back then, trade unions had pricing power, and globalism was much weaker = weaker substitution effects, more powerful influence of inflation expectations. France had simultaneous high inflation and high unemployment. Today however, rising unemployment will kill labor's bargaining position. The bond market says demand destruction will lower energy prices and unemployment will kill labor quickly. I'm not arguing with the bond market.

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Jul 28, 2022Liked by Alfonso Peccatiello (Alf)

Thanks for this clear and concise analysis πŸ‘Œ

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Jul 28, 2022Liked by Alfonso Peccatiello (Alf)

Thank you so much for this update Alf!

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Jul 28, 2022Liked by Alfonso Peccatiello (Alf)

Great article thank you for sharing! Love the positive outlook.

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Jul 29, 2022Liked by Alfonso Peccatiello (Alf)

"When real yields decline, valuation intensive and risk sentiment driven asset classes generally tend to outperform.

That's because the marginal inflation-adjusted return for owning cash USDs (risk-free real yields) becomes less attractive and the (real) discounting rate for long-term cash flows becomes much less punitive.

Hence, the incentive to chase risk assets is larger - actually, following this narrative one could argue β€˜β€˜the riskier the better’’.

This is why I follow you - you explain why the average person who may not invest in bonds should care about what the bond market is doing. You connect the dots to risk assets. You even clarify/summarize what your podcast guests are saying in a more understandable way for laypeople. Fantastic! I don't know of any other macro analyst who does that.

I just subscribed to Macro Compass and tweeted my appreciation for your work: https://twitter.com/4PFinance/status/1553116317330198528?s=20&t=78MtDdnkjJ_PVWAffxJ-4g

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Jul 28, 2022Liked by Alfonso Peccatiello (Alf)

Hi Alf, thank you very much for sharing the analysis with us. Just wondering, how do you calculate the 5yr forward, 5yr real yield? I can find the USD I25 FORWARD RATE 5Y5Y on BBG terminal, but which inflation figure do you use to arrive at the real yield? Thanks a million!

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Jul 28, 2022Liked by Alfonso Peccatiello (Alf)

Thanks for the post

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Jul 28, 2022Liked by Alfonso Peccatiello (Alf)

As usual, excellent.

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Jul 28, 2022Liked by Alfonso Peccatiello (Alf)

Best analysis yet!

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Jul 30, 2022Liked by Alfonso Peccatiello (Alf)

Thanks a lot for your analysis Alf. Always clear and conciseπŸ‘πŸ™

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Jul 30, 2022Liked by Alfonso Peccatiello (Alf)

Thanks for a very clear and concise overview, showing in-depth understanding of the markets. Cheers!

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Jul 29, 2022Liked by Alfonso Peccatiello (Alf)

A well reasoned thorough analysis. Thanks!

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Jul 29, 2022Liked by Alfonso Peccatiello (Alf)

Thank you Alf. I appreciate that you share your knowledge.

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Jul 29, 2022Liked by Alfonso Peccatiello (Alf)

Well done Alf... as always!

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Jul 29, 2022Liked by Alfonso Peccatiello (Alf)

Very insightful. Picking up on the subtleties in a useful way. Thank you for sharing your work!

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Jul 29, 2022Liked by Alfonso Peccatiello (Alf)

Great update. Thank you, Alf!!

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