Are the elephants coming home to roost?

Roosting elephants? Almost as mental as thinking the market might go down, right?

That's what I had mentioned on Friday in this piece.

Just a quick update to the numbers on this one...

Today's Initial Jobless Claims came in at +261k.

Ignore the May print.

There was a revision there which means today's print is the highest in 19 months!

Yikes.

Now what's also pretty shitty looking is how commercial real estate loan origination has been stagnant for a while now, and commercial and industrial loans have been in a bear market through 2023 after a ridiculous mid-2021 to Dec 2022 bull trend...

If people aren't earning...

Then cashflow is not so liquid...

Which means businesses aren't earning...

An we get a steaming pile of shite.

What do we do then?

This isn't really a trade recommendation, but a way to think of what the best outcome might be here.

If we are seeing the slowdown in Europe occurring...

If we're thinking inflation might have topped out for a bit...

And if we're thinking some people might panic a bit about the employment situation...

Isn't that all a little disinflationary, and so we should buy bonds?

Here's TLT for you US guys and non-retail non US peeps...

And here's IBTL which is very similar for UK fellas.

Yes, OK, I got my arse handed to me when I thought inflation would be transitory...

And then Russia threw its toys out of the pram and decided to invade another country like a three year old.

But I do like bonds here.

We've seen a steady downtrend in the 10y breakeven inflation rate through this last year, while bonds haven't really caught a bid.

For me this is quite a nice risk to reward view, but it is quite bullish on inflation starting to remain sticky to the downside, something I am cognizant that I got caught out on in the last couple of years.

But isolating factors, I feel as though the probability is in the favour of bonds.

Every time rates have been at this level or higher, something has broken, and I don't really fancy being short humanity to be perfectly honest with you...

So to express a view that inflation is no longer a consistently increasing phenomenon, I reckon bonds tickle my fancy.

Not yet though.

I think on TLT, buying a bit more than a taster would happen above $110 and on IBTL, it's a nice shout to start getting involved at current prices.