Investors keep absorbing new information and are positioning their portfolios accordongly. In the latest survey by BoA about potential economic scenarios, the majority of them keep thinking that the Fed will be able to manage the end of the cycle without causing a recession. Most of them, or about 3/4 of respondents are still in the Soft Landing camp. Although there is no formal definition, this means they expect no recession, or 2 consecutive quarters of negative GDP. But perhaps the key to economic growth is not within monetary policy realm, and it’s more within the scope fiscal policy and debt. The U.S. economy is growing because it has been issuing an increíble amount of debt, which used to have a positive multiplier effect (more than $1 of growth per 1$ of debt), but now it needs more new debt to barely grow. The landing gear is tied to debt, not rates.
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