This time last year, I wrote that the New Year tradition of making forecasts for the year to come was an even more perilous exercise than usual. My reasons at the time were linked to the lack of visibility on the economic situation and the uncertainty on the banking landscape.

In the following, I try to answer some of the main questions people have posted on the blog in the past few months.

Long-term government bonds have been badly hit by expectations of economic recovery and falling investor risk aversion. Since mid-March, long-term government bonds have slumped with the yield on the 10-year bond increasing by 150 basis points (1.5%) and 75 basis points (0.75%) respectively in the United States and in Germany.

A lot of investors are currently worried about stagflation. While I agree that the risk of a US recession has increased, I don't think that we are in an environment of structurally higher inflation.