Just over a month ago, when we outlined that Treasuries were looking increasingly attractive, one factor driving our call was an acceleration in the decline of our economic models. Of particular note were the PMI models because not only is a decline in ISM Manufacturing typically associated with lower 10-year yields but also because it looked like we were on the brink of breaking levels that historically, unless the Fed eases policy, are solid recessionary signals. Fast forward to today, and looking at the price action in markets, you could be forgiven for thinking that’s exactly what the Chairman had promised to do.
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