I think this has to be put into perspective. We had a huge, huge rally for a long time in the bond market. We are talking about how 10-year yields have fallen from 5.4 percent in March to oh-my-goodness-I-can't-believe-this 3.6 percent.
More Quotes from Michael Cheah:
A lot of people are afraid that increases in the PPI will eventually spill over to the CPI but it's important to put things into perspective. The majority of the average cost of goods is from labor and wages are still under pressure,Michael Cheah
A slowdown is baked in the cake, ... A big part of economic growth has been driven by consumer home-equity loans and if home prices are subdued, you won't have more loans driving spending.
Michael Cheah
The prevailing fear for March being bad for Treasuries is so strong that nobody is stepping up to buy. The value investor in me says there's a buying opportunity in here somewhere, but I have to be respectful of the current sentiment.
Michael Cheah
Could that happen again Sure, because it will take the clear signal of a rate cut before the two-year note yield will start moving down.
Michael Cheah
If the yield curve inverts, that is bad because banks will not lend money at rates lower than their borrowing costs. It's as simple as that and the economy will slow down naturally,
Michael Cheah
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