It wasn’t the basis for rational analysis, it was a very public admission of bias and error. We don’t know why inflation ultimately will do what we believe it will, they said, we just believe that it will so you should, too. It sounds ludicrous, but it is actually very much in keeping with standard Economics. The puppet show. What [...]
They staked everything on inflation. In truth, central bankers had no other choice. Having backed themselves into such a narrow corner by doing the same thing over and over and over again, it was only going to be one or the other. Either it worked or for all time they would prove they really have no idea what they were [...]
For all the drama and activity of bearishness in August, curve steepening has been the primary influence in September. There haven’t been as many notable events that would easily and cleanly explain the sudden shift, other than peculiarities in the cash markets (including supply flow). In other words, I don’t think it much of a breakout of sudden optimism but [...]
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