Media & News

November 27, 2023

Jens Nordvig on Jack Farley’s podcast, Forward Guidance, 24 November 2023

 Exante Data’s Jens Nordvig was on Jack Farley’s podcast, Forward Guidance, to discuss interest rates and FX.


Jens discusses the incredible moves in the yield curve, how this cycle is different, and how credit dynamics are playing out (00:00:41). Longer lags than expected keep surprising people. As people give up on their forecasts, new theories emerge. The US consumer has proved more resilient so far, but the realities of US deficits and the rise of interest expense due to debt rolling over will imply spending cuts.

As we previously argued on a  client call on October 10, rates have likely peaked. Jens explains here that as we get close to the inflation target the Fed will be questioning what are equilibrium interest rates and what the appropriate policy rate is (OO:27:56). There are likely big cuts on the horizon, merely to bring the policy rate back to equilibrium.

On currencies (00:31:00), Jens argues revisions to growth trajectories in the US versus the rest of the world have moved exchange rates this summer -particularly the dollar. After a relaxation trade, movements are now focused on the actual data coming out of each country. Are we actually seeing anything on the growth front that is incrementally positive?