Bond Outlook September 6th

The questions we have raised in recent weeks reflect the great incertitude and broad range of opinion on whither the US and the world economy. Although possible outlooks really fall on a continuous spectrum, we count four scenarios receiving support from various parts of the investing community:

1. “Goldilocks”: a US economy which is neither too hot nor too cold – basically a continuation of the recent years with households still spending and foreigners supplying the capital to cover the current account deficit.