Torsten Slok

And those worries, of course, in sentiment, are exactly showing up that, in particular, the lower leg of the K continues to be under significant distress.

So, Rich, when you think about yield curve dynamics, I mean, what is your view on what the yield curve will do?

The consensus has the view that it will steepen.

Is that also your view, or do you think front-end rates will stay stable and long rates will also stay stable, or how do you think about the curve at the moment?

And this may be an unfair question.

Do you think an incoming Fed chair is going to make dramatic changes to the Fed staff in terms of who is head of which departments?

Or how do you think the incoming chair might think about things if he or she doesn't think that it's likely that interest rates are going to be coming down because of persuading the committee?

Well, Rich is well famous for the credit multiplier and the work he did with Bernanke.

And, of course, what credit markets have been doing and what credit markets are doing is often very critical, of course, for the economy.

Because if credit conditions begin to tighten, the economy has a problem.

If credit conditions begin to loosen, of course, the economy could also have a problem, namely that it just becomes too easy money, including in credit markets.

Well, what I think is very important to remember is that foreigners come to the U.S.

for two reasons.

They come to cut coupons in fixed income because yield levels are higher here, and they come to get exposure to AI.

So for any discussion for talks about, well, will the dollar begin to go down?

You need to come with a view that either AI is going to roll over or interest rates are going to be a lot lower.

So as long as you can cut coupons and get much higher returns in U.S.

assets, you will still have foreigners abroad in Europe, Japan, Canada, Australia who come to the U.S.

to buy U.S.

financial assets because they simply do offer higher returns than what you get in most other countries.