Trump switching from trade warrior to dealmaker; another Brexit delay; the ECB at the end of the road with regards to easing; and a Fed that will cut tomorrow and tilt towards another cut = steepening yield curves and higher real rates globally. For the month we’re looking at chunky yield increases of 13-29bps across a bear-steepening curve in case of German Bunds and 2-22bps across a bear-steepening curve in case of US Treasuries. Furthermore, inversions in the UK and Canadian yield curves have mostly disappeared, while the Bund and UST curves are no longer inverted. Is the steepening reflecting a successful mid-cycle adjustment by central banks and the Fed in particular? Or are we looking at a repeat of the run-up to past recessions: a deep inversion followed by a steepening and a recession next. We believe it’s the former.

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