Yes, I still think there will be a funding crisis. As ever, I don’t pretend to know when.
Renewed recession fears along with Euro panic is obviously driving money into US govt debt and could continue to do so for some time (in fact that seems likely, based on investor “habits”). But then again, the harm to the US’ fiscal/debt situation resulting from a recession (lower revenue, higher spending), could be a potential catalyst, if it were a sudden and steep enough deterioration to jolt investor confidence down the road.
Recession typically reduces endogenous inflation pressures. The exogenous inflation pressure will happen if/when the funding crisis happens.
Overall I would say that my view on what will eventually happen has not changed. But the path to get there now obviously includes a renewed “flight to quality” (cough). How long that lasts, I do not know.
