Perscrutating the Hoisington hypothesis
2 June 2021 | by Peter Warburton
In the face of mass defections to the inflationary camp, two (private sector) names stand in resolute defiance: David Rosenberg and Lacy Hunt. While these gentlemen have overlapping views, their approaches are distinct and worthy of separate discussions. This blog will address the ‘Hoisington hypothesis’, the mechanistic analytical framework expounded by Lacy Hunt. Over the past 30 years or so, Lacy Hunt has surfed the towering wave of decelerating nominal GDP growth with confidence and aplomb, earning the gratitude of the many fixed income investors who stuck with him. However, Hunt, undeterred by the unfolding dramas in the bond market in 2021, seems oblivious to the shifting political, economic and institutional foundations on which his framework rests. The trend is your friend … until it bends.