The Most Bullish Chart in the World for Bonds

The report analyzes the declining global wage share and its implications for the macro supercycle thesis. It argues that if the wage share does not recover, current expectations for structurally higher bond yields are likely overstated.

Key Takeaways

• 1.The wage share (ratio of wage income to nominal GDP) is currently at historic lows, contradicting the thesis of a new macro supercycle where labor regains power over capital.
• 2.Recent factors suppressing worker power include restrictive monetary policy and high levels of immigration used to combat post-COVID labor shortages.
• 3.The initial AI buildout is currently boosting corporate profits rather than wages, though TS Lombard believes AI will eventually be labor-augmenting rather than labor-replacing.

Table of Contents

• Macro Picture - Chart Story
• THE MOST BULLISH CHART IN THE WORLD (FOR BONDS)
• Why is the wage share dropping?
• Why have workers stopped winning?
• The AI factor
• Correlation with equilibrium interest rates

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