Commentary The reality of record-high inflation, combined with a hawkish monetary policy, is slowing the economy sharply and has led to the current U.S. recession: two back-to-back quarters of negative growth. The economic contraction should soon cause inflation to roll over along with bond yields; but that isn’t necessarily indicative of a new bull market. It is much the same process that occurred leading up to the Global Financial Crisis of 2008.
The major difference is that the level of inflation today is much greater than it was 15 years ago—a white-hot 9.1 percent for June of 2022, which is actually close to 20 percent, if calculated using the methods in place in 1980. That level is much greater than the 4.1 percent we saw in December of 2007….