Many market analysts focus on boomers because they have the most wealth, but the largest cohort in terms of size are millennials. If they are about to embark on their own mini-baby boom, it could mean that consumer private credit expansion is about to take off.

The other Covid-induced change to the economy is that the decades-long trend of offshoring has been exposed as a weakness in terms of secure supply chains. President Joe Biden has made the reshoring of manufacturing a priority, and it’s probably one of the few things both parties can agree on. This will mean much more capital spending in years to come. This, too, has the potential to create a much more robust economic recovery than in previous cycles.

I don’t know what would be a bigger surprise, an economic recovery that exceeds expectations or two down years in a row in the Bloomberg U.S. Aggregate Bond Index. But the chances of both are higher than many bond investors realize.

Kevin Muir is a former institutional equity derivative trader who now writes the MacroTourist newsletter.

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