First, there are genuine risks posed by the COVID-19 Delta variant, and other potential variants, to the global economic outlook, with the inability of some countries to successfully vaccinate and manage the virus meaning the pandemic may be around for the foreseeable future.
Second, what are highly efficient modern markets may have already, in fast-fashion, discounted all of the expansion, peak and now contraction in this business cycle.
Thirdly, the drop in [bond] yields could be happening because of, not in spite of the Fed’s slow process of winding back quantitative easing, with the realisation that less bond buying, at least in the longer run, means less stimulus and lower growth.
