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Tag Archives: inflation

Curve Sanity (Not What Most People Want To Hear or See)

Rate cuts will be insurance against whatever “trade wars” will throw at the global economy. That’s the current line from monetary officials in the US, anyway. The real question to ask is, how would they know? Starting with trade wars. Is that really what’s behind all this? The evolution of the curves told you everything you need to know, and tell you what to prepare for. It’s not just inversion that is noteworthy. They said all along there was no boom, even during the most maniacal parts of...

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When Verizons Multiply, Macro In Inflation

Inflation always brings out an emotional response. Far be it for me to defend Economists, but their concept is at least valid – if not always executed convincingly insofar as being measurable. An inflation index can be as meaningful as averaging the telephone numbers in a phone book (for anyone who remembers what those things were). If you spend $1,000 a month on food for your family, and food prices rise 6% generally that’s an additional $60 that has to come from somewhere. It is...

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Wildly Wrong About Interest Rates, Jobs & Inflation

June 11, 2019 10:00am by Barry Ritholtz Today is the 10 year anniversary of one of those things that just stays with you. Get Ready for Inflation and Higher Interest Rates was a column by Art Laffer, published on this day a decade ago. It it notable both for its terrible timing and for being completely and utterly wring. It arrived a few months after the US stock market bottomed, and the exact month the Great...

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The (Fake) Recovery Behind Record Low Bund Yields

No Federal Reserve Chairman under its current configuration can say QE didn’t work. Those words will never pass the lips of whoever it may be occupying that position. The world’s bond markets, however, are trying very hard to make this resistance as uncomfortable as possible. The one thing central bankers here along with everywhere else LSAP’s were unleashed could try to claim was yields. And by those I mean something Economists call term premiums. Those trying to argue in favor of...

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Investing On Persistent Foundations

The volatility in the investment markets over the past few months has been truly astonishing. Prices are violently fluctuating and the range of traditional volatility indicators like the VIX have exploded. Just look at the daily moves of the popular U.S. stock market indices for example. While it’s generally folly to attribute specific causes to market action (there are simply too many actors with too many motives), I think it’s fair to say that the trade negotiations with China likely played...

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Janus Powell

Again, who’s following who? As US Treasury yields drop and eurodollar futures prices rise, signaling expectations for lower money rates in the near future, Federal Reserve officials are catching up to them. It was these markets which first took further rate hikes off the table before there ever was a Fed “pause.” Now that the Fed is paused, it’s been these same markets increasingly projecting not just a rate cut or two but an entire series of them. Playing from behind once more, Chairman...

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Monthly Macro Monitor: Economic Reports

Is recession coming? Well, yeah, of course it is, but whether it is now, six months from now or 2 years from now or even longer is impossible to say right now. Our Jeff Snider has been dutifully documenting all the negativity reflected in the bond and money markets and he is certainly right that things are not moving in the right direction. But moving in the wrong direction, even deeply, as we discovered in 2015/16, doesn’t necessarily mean recession. This slowdown – and...

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May 29: One Year Later, No Longer Risks

One year ago today, something huge broke inside the global monetary system. Exactly what, we may never know. I believe it was something to do with collateral and securities lending, the kinds of things that brought AIG to its knees in what doesn’t seem like all that long ago. In a rush, over several days, everyone around the world piled into the world’s safest, most liquid assets. In the immediate aftermath of that rush, other parts of the bond market responded in kind. Eurodollar futures,...

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Surefire Recession Signal In Pictures

The strength of inversions widened today. That’s a strong recession warning, but it is not the actual recession signal. Inversions Widen Today’s bond market action is a strong follow-through on Friday’s action. Imminent Signal The recession imminent signal is not the inversion but a sudden steepening of the curve following a period of inversion. A comparison of the strength of the inversions today vs 2007 will show what I mean. Inversions With the 3-Month Note Today...

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