What does the sharp rise in long-term debt just before Jackson Hole mean

Yesterday's PMI (Purchasing Managers Index) for the US, EU (Germany+France), and the UK were all weak, which made me recognize that economic sacrifices will be attached to overcoming inflation. In the EU region, not only manufacturing, but also service industries are not good. Germany's exports to China fell sharply to ▲ 6.2% compared to the previous year due to the division between the US and China, and the southern European tourism industry, which is the main force of the latter, has also exceeded its limits due to overtourism and labor shortages. Therefore, Germany has weak numbers for the first time in 3 years, and Buddha also has weak numbers for the first time in 2 and a half years.

Executive Director Lane, the ECB's chief economist and second only to President Lagarde, stated that “even if demand is artificially lowered, it is not drastic, and it is fine to the extent that it falls below supply,” and it is predicted that interest rates will not be raised in September. The UK is also at a low level for the first time in two and a half years, which foreshadows negative growth in the 3rd quarter. The US is also weak for the first time in six months.

It is thought that the sharp rise in US bonds yesterday was due to a movement to consolidate positions ahead of Jackson Hole. There was probably no choice but to short cover long-term US bonds, which had been sold due to the strength of the US economy, considering that they had already been sold quite a bit, that interest rate hikes were in the final phase, and that real interest rates were positive. At Jackson Hole, not only Chairman Powell but also President Lagarde will participate. It would not be strange if there was a message from the ECB to the market.