yeah, HYG is still at 2 std. deviations above its 200 dma; it's still pretty high

The Fed has to step in with QE if rates go up much further from here. There is an underlying global liquidity cycle at play that lags the root cause of the cycle which is a global sovereign refinancing cycle in effect since the debt jubilee in 2008/2009.  Every 4 years or so now, they have to push rates lower so they can roll their debt out again at lower than market rates.  They will extend and pretend until something either blows up completely or hopefully a growth miracle comes along and bails them out of the cycle (right now they are hoping that's AI)...because the only other choice is allowing deflation (rich people would lose their shit so that's not an option). We have not recovered from 2008. We're just at the upswing on the liquidity cycle which happens to occur because sovereigns once again need to refinance their massive debts from both 2008 and COVID. As they push rates lower to allow decent refi rates, global liquidity rises and the cycle repeats. The further we go along the path, the less the benefit that is received from each marginal dollar that is injected. At this point, their is very little global growth despite record high and coordinated global liquidity dumps. That's a problem.

Some people probably wonder "why hope for a growth miracle - how does that help?"  If you go back to the basic equation of GDP growth % - Gov spending as a % of GDP.  Right now, it's taking more and more spending to get positive nominal growth. It's not as simple as this equation, but it's also not as complicated as many would have you believe. If we do get a "growth miracle" from AI, in theory, we could start reducing Gov deficit spending to a "normal" levels. E.g. in the recent past, a 2% deficit (even though considered extreme at the time) often resulted in 3% nominal GDP.  That's somewhat sustainable, especially if you think the deficit spending is responsible for great than a 1:1 change in growth...which I don't think is true most of the time but it's often hard to say.  8% deficit for 2.5% growth, growth that is at risk of shrinking lower, is not sustainable...we're just digging a deeper grave (so pray that AI works, I suppose) 

All you have to do to suss out "logical" is to subtract Gov spending (as a % of GDP) from GDP. If the result is a negative number, the economy sucks.  It's not that complicated. It's made complicated to assist with gaslighting. You're an engineer. Run the numbers.  The problem is that you have to factor in Gov spending when dealing with market (we don't trade the economy) and massive Gov spending at that (around 8% of GDP currently)....and Gov spending is not transparent. There are no quarterly reports that we can trust. So yes, it is logical and rational to be pessimistic on an economy when GDP is 2.5% with 8% Gov spending...but the market follows the counterfeiters, not the economy...so it requires balance.  But again, the underlying math to isn't all that difficult - the complexity just hides the basic truth of the situation.