The Institutional Risk Analyst

When Ray Dalio says to be afraid of the bond market, he is asking a question that belongs in the mid-1970s, when the dollar still competed with other currencies and US interest rates were actually affected by interest rates in other nations. But today, with many of the other industrial nations led by Japan, China and the EU literally drowning in public debt, the US is still the leader of the parade.

“Our operative assumption is that the strong economy and continued high inflation expectations will mitigate against any interest rate cuts in 2025,” Whalen notes. “We expect to see the FOMC end the shrinkage of the central bank’s balance sheet, which should help to increase the very low growth rates for bank deposits.”

US history over the past century was largely written by liberal Democrats, who at least rhetorically opposed tariffs and embraced inflation