Not too long ago the overwhelming consensus from the perennial Wall Street Carnival Barkers was that investors were enjoying a global growth renaissance that would last for as far as the eye can see. Unfortunately, it didn’t take much time to de-bunk that fairy tale. After a lackluster start to 2018, the market’s expectations for global growth for the remainder of this year is now waning with each tick higher in bond yields.

U.S. economic growth displayed its usual sub-par performance in the first quarter of 2018; with real GDP expanding at a 2.3% annual rate, which was led by a sharp slowdown in consumer spending. The JPMorgan Global PMI™, compiled by IHS Markit, fell for the first time in six months, down rather sharply from 54.8 in February to a 16-month low of 53.3 in March. The index point drop was the steepest for the past two years. To put that decline in context, the February PMI reading was consistent with global GDP rising at an annual rate of 3.0%. However, the March reading is indicative of just 2.5% annualized growth. Therefore, not only is global growth already in the process of slowing but the insidious bursting of the bond bubble is gaining momentum and should soon push the economy into a worldwide synchronized recession.

One thing that was on the rise in the first quarter of the year was inflation expectations. Consumer inflation increased at a three-month annual rate of 2%, as wage growth increased by nearly 3%. The increase in wage growth is most likely sounding alarm bells for the members of the FOMC, who are of the belief that gainfully employed people are the very progenitors of runaway inflation. This spurious reasoning will give more credence to the fatuous Phillips Curve Model of inflation–of which all members of the Fed worship under–and thus cause them to hike rates to 2.0% at the June meeting. And also to signal that there are many more rate hikes ahead.

Nevertheless, before the economy reaches its inevitable bout with intractable inflation, it will experience a deflationary depression cycle brought on by the unprecedented governmental experiment of raising rates at the same time it is also destroying $30 billion per month worth of its money. This phenomenon will soon increase to $50 come October—just as annual deficits leap well above $1 trillion.