Tier 1 Alpha: Brace Yourself for a Hard Landing

Yes, this is still happening. This morning, the 2's vs. 10's yield curve remains inverted at 74 basis points. The yield curve bats 1.000 in predicting a recession once the curve starts steepening quickly. It's always the challenge at Tier 1 keeping our audience informed of the macro despite being a flows desk; the macro is only relevant once it's acutely relevant from an employment standpoint. Hard landing, soft landing, wheels on sideways landing, in case of a water landing, deploy your throw cushion below your seat after surviving an ocean landing at 600 mph. It all matters, but only if the flows change. It remains our base case that this 787 Dreamliner will need a mechanical check after a hard landing.

As inflation declines, it's going almost unnoticed that this is leading to an aggressive deceleration in nominal GDP growth. The figures presented are post-inflation, representing real GDP. This surged to 2.4% in Q2 from 2.0% in the previous quarter. However, given the drop in the inflation index used to determine real GDP from 4.1% to 2.2%, the statistics subtly concealed a decline in nominal growth from 6.1% to 4.7%.