Tuesday , April 20 2021
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Tag Archives: inflation

Bonds v. Economists 5

Given the historic data for US retail sales, “somehow” the bond market ignored them yesterday (and today). Yields globally fell for the most part, with real yields (TIPS) really discounting the significance of consumers in March. Bonds aren’t buying that this is anything other than temporary.Not surprisingly, the mainstream media refuses not to buy what bonds aren’t. I mean, for the fifth time since 2009, bonds vs. Economists (with mainstream media not content to cheerlead, literally...

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Perhaps Just One Word Absent From The Historic Consumer Splurge

Enormous. Terrific. Unbelievable. Biggest ever. The superlatives for US consumer spending during the month of March 2021 are appropriate, and for once they aren’t caused by some artifact of arithmetic or some other trick. While there are absolutely some base effects within the numbers, these levels of retail sales are far and away more than those. It’s so ridiculous that there’s really little purpose in producing charts since all the estimates one after another just print way, way off...

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Why *Only* That Specific One?

On February 23, the US Treasury sold off $60 billion and change of 2-year notes (CUSIP 91282CBN0). This particular shorter-term instrument has been in the crosshairs of the reflation trade, lurching in and out of it going back to last October, perhaps even late September. Caught up being the immediate tenor following the bills which have been bid (for “some” reason) and longer-term notes and bonds which are more reflation sensitive, the yield on the 2s has been yo-yoing back and forth...

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Fragility (脆弱性)

For a short while, with reflation being traded in almost every corner of the global bond market, the Bank of Japan started to get “those” questions again. Almost of the humble brag variety. A few years ago, Japan’s central bank had widened what it considered to be an acceptable trading range for its 2016 QQE addendum of Yield Curve Control (YCC). In 2018, Haruhiko Kuroda’s regime stated that it would “allow” 10-year JGB yields anywhere between -20 bps and +20 bps. By late February 2021,...

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Consumer Price(s) Incalcitrant

While we consider the PPI’s view of inflationary pressures as overstated by simple arithmetic and the math of commodities, there’s no denying that producer prices have risen by a substantial amount. The question, the whole issue, is why. If it is truly because price pressures are building and have grown close to breaking out in systemic fashion, then that would indicate the sustainable trend more consistent with the term inflation.In order to reach that threshold, producer prices must...

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US CPI to Surge, but is it All Base Effect?

Overview:  The US raised $207 bln yesterday by selling bills and coupons with little fanfare.  The bid-cover on the three-year and 10-year sales were a little softer than at the last auctions. Today, the US will sell $24 bln 30-year bonds, a few hours after news that is expected to show that CPI accelerated to its highest level since early last year.   At around 2.35%, the 30-year yield is at the lower end of the range seen over the past several weeks. The 10-year yield is near 1.69%, a...

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Weekly Market Pulse: Nothing To See Here. No, Really. Nothing.

The answer to the question, “What should I do to my portfolio today (this week, this month)? is almost always nothing. Humans, and especially portfolio managers, have a hard time believing that doing nothing is the right response….to anything…or nothing. We are programmed to believe that success comes from doing things, not not doing things. And so, often we look at markets on a day-to-day or week-to-week basis and think something of significance happened and we ought to...

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The Urge to Surge

The US dollar pulled back, and long-term yields softened last week, but the economic surge has only just begun.  The more than 900k rise last month's non-farm payrolls and the jump in auto sales will set the tone for this month's economic data, and investors will get a taste of it next week. The US data will be robust in absolute terms but also relative to other countries.France and Spain have already revised their growth forecasts this year, and Bundesbank President Weidmann hinted that it...

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Scorching, Blistering, Highest In A Decade! Powell’s The Voice of Reason Here?

If there is one thing Economists understand very well, it’s mathematics. This is practically all they do, and all that means much to their discipline. If there’s one thing Economists don’t seem either competent with or interested in, it’s the economy. The math is supposed to match the other’s reality, yet rarely does.There are times, however, when simple calculation is sufficient and (figuratively) on the money (literally, that is the whole other story).Such was the case around 2011 and...

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Disappointing Economic News in Europe, Elevated Geo-Political Risks, and Rising Yields Help the Greenback Recover

Overview:  The dollar has come back bid.  A disappointing and unexpected increase in the US weekly jobless claims pressed yields lower, with the 10-year falling a two-week low and seemingly dragging the greenback with it.  The greenback is trading higher against nearly all the major and emerging market currencies today amid heightened geopolitical risk, a stronger than expected rise in China's inflation gauges, and poor European industrial production data, despite the improvement in the...

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