Bloomberg Surveillance

Bloomberg Surveillance: 'Enormous' Bond Market Volatility

8 snips
Nov 17, 2023
El-Erian discusses bond market volatility and restoring Fed's credibility. Kelton talks about putting fiscal policy on autopilot. Chiavarone describes Fed's policy trajectory as rocky. Schork highlights traders' skepticism about oil supply levels. Lowe says Biden-Xi Jinping meeting won't change dynamic between two countries.
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INSIGHT

Deflation and Consumer Behavior

  • Deflation discourages consumer spending by incentivizing delayed purchases.
  • The US currently experiences deflation in specific sectors like food, but not general deflation.
INSIGHT

Market Assumptions and Fed Policy

  • The market assumes the Fed's hiking cycle is over and anticipates deeper cuts next year without a recession.
  • This assumption is now priced in across various markets, raising concerns about its accuracy.
INSIGHT

Fed Policy's Impact on Fiscal Policy

  • The Fed's rate hikes act as a regressive fiscal stimulus, increasing government debt service costs.
  • This creates a cycle of higher rates, deficits, and debt, impacting fiscal policy.
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