Bond Outlook June 24 2009

The flu (i.e. the financial system) is being cured, but where does this leave the patient with lung disease (aka the economy – see last Weekly). The answer seems to be “still in a pretty bad state”. John Mauldin has highlighted work by both US and Irish universities tracking the current recession against the Great Depression on a global basis (as distinct from the USA alone). Measures of GDP, trade volumes and stock markets are, at best, echoing similar data for 1929 onwards, and are sometimes even worse.

In many regards it is a good thing to have dealt fairly well with the “flu”.