In this morning’s edition of The Macro Show, Hedgeye CEO Keith McCullough answered a subscriber question regarding why the yield curve flattens during Sticky Stagflation.

“We have upward pressure on the short end as the Fed continues to update their ridiculous word ‘transitory’. As the short end rises, the market gets scared that the Fed is going to eff up, ‘Oh, they’re tightening into a slow down!’ That’s because they are. The Fed is late to the party on inflation, and they’ll be tightening into a real growth slow down (leading the long end lower),” explains McCullough, as he highlights why he’s positioned for a #Quad3 yield curve flattening right now.

“Stagflation is nasty. Go back to 1971 and pull up a 2s10s chart… looks just like today.”

McCullough: Why The Yield Curve Will (Continue To) Flatten - early look