Misguided

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The Repo Ricochet

 

Recent repo rate spikes are a warning of another 2007/08 Crisis, but not a guarantee of one. Markets are becoming illiquid. Despite FOMC rate cut in September, policy needs to focus far more on balance sheet expansion, i.e. QE. This will push bond term premia higher, cause yield curves to steepen and underpin outperformance from value over growth stocks.

 

 

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