Last week, Darius sat down with Paul Barron to discuss global bond markets, #inflation, #bitcoin, and more.
If you missed the interview, we have you covered. Here are three takeaways from the conversation that every investor needs to see:
1. Volatility Has Returned to Global Bond Markets
Over the past month, there has been a striking shift in bond market volatility:
- The US 10-year yields have increased by 48 basis points
- The UK Gilt 10-year yields have increased by 43 basis points
- The German Bunds have increased by 22 basis points
Incremental confirmation of the economic resiliency in the US and Japan and the resiliency of inflation in the Eurozone and the UK have been the driving factors of this uptick in bond market volatility.
2. The Resiliency of The US Economy Will Likely Cause Inflation to Persist
Since last fall, inflation has declined in an “immaculate” way; historically, inflation has only broken down two to three quarters after recessions begin.
But the US economy is not in recession – in fact, it is booming in some respects. The latest estimate for Q3 GDP per the Atlanta Fed’s GDPNow model is a whopping 5.8%.
The strong US economy will likely cause inflation to stabilize at levels higher than the Fed’s price stability mandate.
Within the next 3-6 months, we expect the narrative to pivot from ‘immaculate disinflation’ to ‘sticky inflation.’
3. The Path to Bitcoin’s Next Bull Market Will Likely Remain Volatile
Historically, Bitcoin experiences several 20 to 40% corrections in the years leading up to halvings. We experienced an 18% correction over the past ~month – something we have warned our audience about since April.
We foresee two major tailwinds for Bitcoin in the next year:
- The Bitcoin ETF will eventually get approved, bringing institutional interest with it.
- After the recession begins, which will likely occur in the first half of next year, we anticipate a surge in global liquidity.
We believe these two tailwinds will push Bitcoin north of $100,000 by December 2024, but the path to get there will continue to be rocky and likely back-end loaded.
That’s a wrap!
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