Bond Outlook September 27th

The drop in oil prices could well change significantly the development of the economy. In the short term it has already given a boost to consumer confidence and to stock markets. In the medium term, provided lower prices persist, it alleviates the “cost-push” inflationary pressure which has caused so much concern for us (and for such worthies as Paul Volker, former Fed Chairman) that even slowing the US economy would not suffice to prevent prices rising too fast.