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Tag Archives: inflation expectations

Consumers And Markets Both Agree, It’s Not Consumer Price Inflation

What do American consumers know that Jay Powell and the FOMC apparently don’t? Certainly, those voting policymakers at the Federal Reserve are going to start raising their policy rates for political reasons under pressure from politicians facing deeper and deeper economic scrutiny for every dollar higher in crude oil. The Fed, however, can’t extract any additional supplies of black gold from the ground anymore than it can fabricate semiconductors Taiwan won’t. Set aside all that, it’s also...

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The Money *All* Agrees: Taper Rejection Meets Policy-Error Error

Balance sheet capacity as an intangible (and deeply misunderstood) monetary property is the biggest motivating factor behind changes in or to the offshore, shadow ledger-money reserve system. The eurodollar. Since it is a distributed ledger shared amongst, and kept by, the big-bank global banking cabal, its members’ ability to expand their own individual balance sheets contributes to the overall increase in availability of the eurodollar as (fictive) reserve currency.Or, contrarily,...

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An October (‘inflation’) Revolution

Most Americans understandably have tunnel vision when it comes to the American CPI and what it might portend for their personal circumstances. Gasoline prices and those for anyone trying to buy a car or now rent some kind of shelter, the threat is immediate. From this palpable sense, the word “transitory” today might just seem offensive.Yet, it may prove itself anyway. As discussed earlier in the week, not all Americans are laser-focused on the current price at the pump or what highly...

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Federal Reserve’s Own Inflation Expectations Surveys More Agree w/Euro$ Futures Inversion Than Rate Hikes

The FOMC is going to hike rates maybe even aggressively. There’s not much dispute on this assumption. Why the Committee might be doing so, that’s a whole detailed debate. The Treasury yield curve is building toward inversion while the crucial (and leading) Euro$ futures curve is already substantially upside down.Both are increasingly confident market bets against the FOMC’s position(s).Jay Powell and his group are justifying their public stance and likely future actions based on two...

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One Shock Case For ‘Irrational Exuberance’ Reaching A Quarter-Century

Have oil producers shot themselves in the foot, while at the same time stabbing the global economy in the back? It’d be quite a feat if it turns out to be the case, one of those historical oddities that when anyone might honestly look back on it from the future still hung in disbelief. Let’s start by reviewing just the facts. First up, yesterday the Federal Reserve published the November 2021 estimates for Industrial Production in the United States. As has been the case around the rest of...

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Taper Rejection

For the FOMC, there was no alternative. The CPI’s keep going higher while the unemployment rate continues lower. Those who are Economists and practice Economics’ brand of econometrics, these would be scary times ahead. Inflationary times unless someone puts a stop to them first. Not because of consumer prices today, but because officials are worried consumers are becoming normalized to these high rates of price acceleration. If the public and businesses all begin to expect these to...

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FOMC’s Taper Preview: Inflation Fairy

With the CPI inching closer to 7% and everyone talking about consumer prices, the FOMC meeting which begins tomorrow can’t be anything else other than inflation. Even if there was something else on the economic horizon, say a material “growth scare”, it’s too late for policymakers since they’d already painted themselves into a narrow corner months ago.If they don’t accelerate their QE taper now, they risk sending the wrong signals to the economy which everyone says verges on the edge of...

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Omicron Fears Fading, CPI Huge-r Still, Fed Hinting At Accelerated Taper, And Yet Euro$ Inversion (and other things) Is Still Here

The bond market is imploding, right? It has to be going by everything you hear. Did you know that the last two 30-year bond auctions had gone “awry”, as one mainstream news outlet put it? Another “media” shop declared them “catastrophic.”The second of those long bond sales was conducted just yesterday afternoon, right in time to run into the buzzsaw of the November CPI figures released today. According to the BLS, yep, the highest rate of general consumer price increases going...

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Did Last Week Deliver Some Sour Certainty?

This sour/soar stuff goes back many years. The last time we went through the same hysteria (if for different reasons), everyone said the global economy was going to accelerate, take off, and sail onward forever after. The world was, they all claimed, set to soar.Globally synchronized growth. The bond market didn’t just disagree, it did so vehemently, a pessimism when 2018 began which only gained (and spread) as the year went further on. The more Jay Powell and those who followed him were...

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Weekly Market Pulse: Growth Scare?

A couple of weeks ago the 10-year Treasury note yield rose 16 basis points in the course of 5 trading days. That move was driven by near-term inflation fears as I discussed last week. Long-term inflation expectations were and are well behaved. I wrote nearly 2000 words last week about that change in inflation expectations and I’m so glad you took the time to read it. And now you can forget it because over the next four days all but 2 basis points of the move in the nominal 10-year was...

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