UST LPPL Crash Exhausting + Updating the Cyclical & Structural Outlook

  • The tactical (1-3m) UST outlook is flipping more bullish again (i.e. yields lower, price higher) as our LPPL models are picking up on crash patterns starting to exhaust on UST futures and the TLT ETF. 
  • On balance, our cyclical (6-12m outlook) models (incorporating growth/inflation LEIs, absolute/relative valuations and term premium) continue to offer a bullish view of UST, adding conviction to act on the LPPL models.
  • However, in the long-run (2-3y+ outlook), we are not believers in the return to secular stagnation or long-term disinflation/deflation. The confluence of our demographic and neutral rate models offer a fairly unambiguous message of higher yields structurally.
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