Pendulum Swings.

ANGLES. · Jul 10, 2022 · 5m

The stock market’s recession/inflation concern pendulum swung back towards recession last week as investors focused on what a recession may look like and how a benign one actually might not prove to be too bad.

One narrative doing the rounds last week was that if the oil price continued to come down (and maybe bring inflation down with it), the US economy might still enter a recession, but it could be a mild and short one which would give the Fed more room to respond in a more supportive manner, i.e., not having to raise rates quite as far or as fast.

This thinking was evident in the bond…