For those calling for 2020 to be the “year of fiscal policy” we have some bad news Supply does not matter to our long-term bond yield forecasts Government bonds appear to exhibit the micro-economic characteristics of goods that have an elastic demand curve Bonds are not potatoes Unlike potatoes, government bonds are unlikely to go bad (default) over time. So the value of a bond today is defined by the expected path of short rates and a term premium. The overly simplistic view that increa
