A soft landing is inflation returning to target without a recession; a hard landing is the same disinflation achieved through a contraction and rising unemployment.
The distinction is about how the output-gap closes. A soft landing needs growth to slow to somewhat below potential for a while without tipping into outright contraction, which is a narrow target given the length of policy-lag.
The no-landing variant describes growth staying strong while inflation stays above target, which sounds benign but is actually hawkish: it means the central bank has more work to do and the terminal-rate repricing higher.
Example: growth slows from 3.1% to 1.6% annualised, unemployment rises from 3.6% to 4.2%, and core-pce falls from 4.8% to 2.4% without a contraction. That is the soft landing case, and it produces a bull-steepener rather than a flight to quality.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Risk and reward on one trade. One trade on a price scale: the entry sits 2.00 points above the stop and 6.00 points below the target, so the shaded reward band is three times the risk band. The ratio compares what is lost if the stop is hit with what is gained if the target is reached.
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