SocGen's Edwards: I was wrong, I was too optimistic!

'Shocking slump' into outright deflation

Société Générale's bearish analyst Albert Edwards has said the mounting evidence which suggests inflation has already slid into deflation will result in the US 10-year treasury yields converging with Japan and Germany at around -1%, and the next recession will be deeper than even he previously thought.

Permabear Edwards (pictured) said if one looks at core Consumer Price Index (CPI) inflation then it highlights a "shocking slump" into outright deflation over the past six months. Despite this, however, the analyst said the Federal Reserve should still begin to normalise interest rates in order to accommodate for the next inevitable recession. He said: "If I were a Fed governor I would be pretty shocked/concerned/bemused at inflation developments this year. However confident the Fed is of a self-sustaining-recovery, there is growing evidence of a slide into outright deflation. "Def...