VTWO - U.S. Economy Getting Better But...

• Under normal circumstances, the economy is relatively close to its steady-state glide path, and the fixed-income market is quite reasonably jittery with respect to the latest growth rates.
• The reality is that current conditions are nowhere near normal. At the beginning of the last cycle, the only labour market series that offered useful information was the employment-to-population ratio. We are still below the lows of the last cycle.
• From a markets standpoint, one can argue that the markets are not pricing in much tightening on a multi-year horizon.

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