A top Wall Street economist says the bond market is signaling a dire scenario for the economy is in sight
From Yahoo Finance: 2025-05-24 13:00:00
Torsten Sløk, the chief economist of Apollo, warns of stagflation in the US, where the economy slows while inflation remains high. The bond market is signaling weaker growth and higher inflation, a situation feared for its difficulty for monetary policymakers to address.
With the recent spike in bond yields, economists fear the US economy could be heading towards stagflation, a scenario where economic growth slows while inflation remains high. This would pose challenges for policymakers, as raising interest rates to combat inflation could further slow growth.
The bond market is sending a dire warning about the US economy, with concerns about the US budget deficit and Trump’s tariffs leading to higher interest rates. The 10-year US Treasury yield spiked to 4.61%, indicating some market participants are pricing in a recession with stagflation.
Consensus expectations for US economic growth are declining while inflation expectations are rising, according to Torsten Sløk of Apollo. Stagflation concerns are on the rise as traders anticipate the longer-term effects of tariffs on the economy.
JPMorgan’s Jamie Dimon believes the economy is at risk of stagflation due to global fiscal deficits, remilitarization, and trade restructuring. Nobel laureate Paul Krugman warns of imminent price increases from tariffs, leading to economic slowdown and stagflation.