In a series of notes over the last couple of months, we have explained that in the US, our work is emphatically recessionary. Please don’t get us wrong, we aren’t suggesting a 2008-09 type calamity, rather, courtesy of an inventory cycle, construction slump and what appears to be worsening credit crunch, just a good old fashioned hard landing. Clearly, this should be very bullish for Treasuries. However, we have discussed our preference for steepeners vs outright longs because not only do you get the obvious bull play, but also the bear for free!
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