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Tag Archives: inflation

US CPI to Accelerate, while Omicron adds Color to Covid Wave that was Already Evident

At the risk of over-simplifying, there seem to be three sources of dynamism in the investment climate:  Covid, the Federal Reserve, and market positioning.  The last of these is often not given its due in narratives in the press and market commentary, so let's begin there.  The anthropologist Clifford Gertz once posed the question about distinguishing between someone winking and someone with a twitch in their eye, and a person mimicking the wink or twitch.  Context matters.  All buying is...

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The Repeating Tides of Payroll And Inflation

There were all kinds of good news in the August payroll report. The Bureau of Labor Statistics would publish an acceleration in headline numbers, just about every one of them. The Establishment Survey “surged”, wage growth registered its largest annual increase in nearly a decade, while one broad measure of slack, U-6, tumbled to its lowest point since the start of the 21st Century.The US economy, it might have seemed, was on an unstoppable roll. US job growth accelerated in August, with...

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The Greenback Finds Traction ahead of the Jobs Report

Overview:  The Omicron variant has been detected in more countries, but the capital markets are taking it in stride.  Risk appetites appear to be stabilizing.  The MSCI Asia Pacific Index rose for the third consecutive session, though Hong Kong and Taiwan markets did not participate in the advance today.  Europe's Stoxx 600 is struggling to hold on to early gains, while US futures are narrowly mixed.  The US 10-year yield is a little near 1.43%, down around six basis points this week. ...

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This Is A Big One (no, it’s not clickbait)

Stop me if you’ve heard this before: dollar up for reasons no one can explain; yield curve flattening dramatically resisting the BOND ROUT!!! everyone has said is inevitable; a very hawkish Fed increasingly certain about inflation risks; then, the eurodollar curve inverts which blasts Jay Powell’s dreamland in favor of the proper interpretation, deflation, of those first two. Twenty-eighteen, right? Yes. And also today.Quirky and kinky, it doesn’t seem like a lot, at least not at first....

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If Not ‘Flow’, Then Has ‘Stock’ ‘Rigged’ The Flattening Curve In QE’s Favor?

Flatter. The yield curve continues to shrink in the important middle calendar spaces where growth and inflation expectations run the place. Treasuries have been doing this since around March, a peculiar (given monolithic mainstream reporting otherwise) eight-month reign of growing pessimism rather than inflationary confidence. Did the market foresee omicron more than half a year ago? No. That’s not really what this has been all about. As noted yesterday, the unnervingly steady flattening...

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Pessimistic Omicron Assessment Squashes Risk Appetites

Overview: A pessimistic assessment offered by the CEO of Moderna shattered the fragile calm seen yesterday after the pre-weekend turmoil.  Risk appetites shriveled, sending equity markets lower and the bond markets higher.  Funding currencies rallied, with the euro and yen moving above last week's highs.  The uncertainty weighs on sentiment and makes investors question what they previously were certain of.  The MSCI Asia Pacific Index fell over 1% before the weekend and again yesterday. ...

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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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Camp Sour or Soar: Inflation (global) and Spending

It’s always a balance of probabilities tug-of-war. Markets (not stocks) are continuously trying to discern risk since everything is really converted to some kind of risk-adjusted basis. And if the perceived weight of those tilts downward thinking forward, then it may not matter much or at all what’s going on right now.What’s going on right now is, according to everyone, massive inflation. A soaring nominal economy not just in the US, also purportedly worldwide. Therefore, consumer prices...

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Sentiment Remains Fragile

Overview: The fire that burnt through the capital markets before the weekend, triggered by the new Covid mutation, burned itself out in the Asian Pacific equity trading earlier today. A semblance of stability, albeit fragile and tentative, has emerged. Europe's Stoxx 600 is up about 1%, led by real estate, information technology, and energy.  US index futures are trading higher, with the NASDAQ leading.  Benchmark 10-year yields are firmer.  The US 10-year Treasury yield has risen about six...

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Jobs (US) and Inflation (EMU) Highlight the Week Ahead

The new covid variant and quick imposition of travel restrictions on several countries in southern Africa have injected a new dynamic into the mix.  It may take the better part of the next couple of weeks for scientists to get a handle on what the new mutation means and the efficacy of the current vaccination and pill regime.The initial net impact has been to reduce risk, as seen in the sharp sell-off of stocks.  Emerging market currencies extended their losses.  The JP Morgan Emerging...

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