ISM peaking. Changes in bond yields correlate to ISM (which is close to a peak) 

Supply side constraints to growth. Shortages of inputs (especially semis) is causing IP to disappoint. We have seen a fall in employment PMIs owing to supply shortages. The issue is whether these supply shortages are temporary (we think they are) and if they are not, then price (i.e. inflation) will rise.  

Fiscal cliffs in 2022. Fiscal tightening according to the IMF takes 6% off US GDP next year. We think it will be less (4%) and be offset by excess saving (12% of GDP) and $14trn positive wealth effect since 1/20. 

China slowdown. China tightening has been greater than expected (special Bond issuance and TSF), resulting in PMIs, retail sales, auto sales disappointing and China accounts for c19% of global growth but we now think that China has done most of its tightening (and on 9th July cut the RRR). 

Delta Variant. 20 states in the US still have under 50% of adults being vaccinated and some Asian countries are imposing tight restrictions. For the fully vaccinated the mortality rate is similar to a severe flu season and we don’t believe it is socially or politically acceptable to have widespread lockdown to protect those who voluntarily refuse the vaccine. By year-end, there is enough capacity to vaccinate 6.8bn people (out of a global population of 7.9bn).