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breakevens

Inflation Undershoots, Inflation Expectations Sketch Out Growing Downside

By |2019-06-28T17:04:07-04:00June 28th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

For the third time in the last five months, inflation expectations have matched record lows. To hear officials and Economists talk, you’d think they were at or nearing record highs. The unemployment rate, after all, is at a 50-year low point which by mainstream reckoning should mean the cusp of an epic wage-driven breakout. According to the University of Michigan’s [...]

The Last Holdout

By |2018-10-23T19:20:44-04:00October 23rd, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

True to form, whoever holds the government it is for them the best economy ever. It doesn’t matter political parties or otherwise affiliations. The rhetoric has become so unhinged that in the US former President Obama is trying to take credit for current President Trump’s economic “miracle” – that doesn’t actually exist. In India, the Modi government is following the [...]

Downslope CPI

By |2018-09-13T16:41:32-04:00September 13th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Cushing, OK, delivered what it could for the CPI. The contribution to the inflation rate from oil prices was again substantial in August 2018. The energy component of the index gained 10.3% year-over-year, compared to 11.9% in July. It was the fourth straight month of double digit gains. Yet, the CPI headline retreated a little further than expected. After reaching [...]

Spreading Spreads (and JPY)

By |2018-08-20T18:56:40-04:00August 20th, 2018|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

What is it that’s different in August? If there was some relative calm in global markets in June and July it certainly disappeared this month. The dollar shot higher and global liquidity indications began sinking again. Yields have fallen on safety (liquidity) instruments more apparently divorced from any other mainstream factors. One place to look for answers is Tokyo. I [...]

Overshadowing The Multi-year CPI High

By |2018-08-13T18:15:42-04:00August 13th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Overshadowed by the “dollar” last week was the Bureau of Labor Statistics. The BLS reported the US CPI had increased in July 2018 by the highest rate since December 2011. Running at 2.95% year-over-year, consumer prices accelerated a little from June’s pace. Not only that, the CPI’s core rate of inflation sped up to 2.35%. That was the highest since [...]

It’s Taking Too Long, The Boom Didn’t Boom

By |2018-07-12T16:34:28-04:00July 12th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

At some point, the boom had to have boomed. We are moving into the past tense for all this now, inflation hysteria almost certainly tucked away into the economic ledger alongside four other false dawns. Data is coming in for June 2018, meaning half of this year already recorded and analyzed. It’s not what it was supposed to have been. [...]

The First Real Reality Check?

By |2017-02-08T19:14:02-05:00February 8th, 2017|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

With several parts of the “reflation” trade rolling over, it is worth noting that one of the last of them to join in what may be growing reconsideration or doubt is inflation breakevens. In the 5-year and 10-year maturities, breakevens were at their lowest point on February 9, 2016, and have been moving higher ever since. However, we have to [...]

Economists Just Now Finding Evidence Against Money Printing That Markets Settled On Years Ago

By |2016-08-30T13:43:01-04:00August 30th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

For a central bank, deflation is the starting point which makes inflation the emphasis. So long as there is a “small” amount of positive inflation then economists have suggested deflation, thus depression, becomes impossible. The reason for that belief is twofold, first having to do with the margin for “error”; that is a small positive inflation rate acts as a [...]

You Can Actually See The Desperation

By |2015-09-25T13:58:42-04:00September 25th, 2015|Bonds, Economy, Federal Reserve/Monetary Policy, Markets|

Why was Janet Yellen’s speech yesterday so highly touted? My last post might be more relevant to that appearance than what is presented here. After all, each FOMC meeting begins with a presentation from the head of the Open Market Desk usually pertaining to comprehensive liquidity (or as much as the orthodox view of it allows). For all the smiles [...]

When The FOMC Completely Loses The ‘Inflation’ Argument, More Economic Downside Must Be Admitted

By |2015-08-25T17:48:58-04:00August 25th, 2015|Bonds, Economy, Federal Reserve/Monetary Policy, Markets|

Lost in all the stock market focus is the renewed disaster being signaled across credit markets, “inflation” expectations in particular. Here oil prices and the “dollar’s” darkening intersect with credit and broad financial settings. Quietly, market-based measures of the anticipated future “inflation” path have crashed. Inflation breakevens in TIPS hedging were as low yesterday as the lowest point from January [...]

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