The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Capital Markets

Bond Outlook October 4th

The key issue to determine soft or hard landing – geopolitics aside – is whether US household gains from cheaper energy will compensate the return to savings as the housing bubble deflates.

Bond Outlook [by bridport & cie, October 4th 2006]

Last week we allowed ourselves a level of optimism almost unique in the history of this Weekly. We predicated our change of view on the decline in oil prices, which, together with the lessening of cost pressure from other commodities and energy sources (notably gas), greatly reduces the danger of stagflation. Stagflation would result from central bankers needing to dampen cost-push inflation through raising interest rates to the point where recession sets in. It is a case of “so far so good”, but the geopolitical situation needs watching in case the “cheaper energy” scenario falls apart because of military action against Iran or even North Korea.


It is symbolic that the DJIA reached a new high on the same day that Iran refused to suspend its uranium enrichment and North Korea announced a nuclear bomb test – a case of “temper your optimism with caution”.


Another way of describing the grounds for optimism is that “cheap money is here to stay”, not so cheap as to be below the level of inflation, but a healthy one percentage point or so above moderate (2-3%) inflation.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree