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Unwarranted Inflation Fears Could Impact Recovery

Interest rates steadied this past week (March 22-26) after the Fed altered the rules, vowing not to cave to market whims or pressures, instead waiting for the “actual data” to dictate the path of monetary policy.  We agree with the Fed’s approach, but worry that the markets’ uneducated view of the causes of systemic “inflation” may push market rates to the point of endangering any chance of a robust recovery. …Read More

Careful Mr. Powell; Higher Rates Will Kill the Recovery

Treasury yields rose again this week; blame this one on Fed Chairman Powell.  In an interview at the Wall Street Journal’s Job Summit, he said that the Fed isn’t ready to stop the run-up in yields “until financial conditions tighten.”  In so saying, he paved the way for those financial conditions to tighten as markets immediately obliged.  We can’t help but think that it would have been better if he …Read More

The Rate Spike Will Damage the Recovery

Fed Intervention Needed There was quite a spike in interest rates the last week of February with the 10-Year T-Note spiking from a 1.36% level as of the close on Wednesday to as high as 1.60% intraday with a close of 1.55% on Thursday.  Friday’s close was 1.45%.  But, a lot of damage was done. It is naïve to think that this spike was caused by the inflation narrative, i.e., …Read More

We Don’t Live in “Normal” Times

The equity markets are in one of those rare moods where they continue to rise no matter the news, even when there are riots in the nation’s capitol complex, and when non-farm payrolls fall -140K.  Would you say this is “normal?” Regarding inflation expectations, interest rates rose rapidly along the Treasury yield curve with the 10-year T-Note yield rising from 0.93% (93basis points) from its close on January 4th to …Read More

Inflation Expectations Rise Even as the Economy Cools

It has now become clear, and mainstream, that the economy weakened significantly in November, and that such weakness will carry forward to year’s end, at a minimum.  The weakness occurred primarily in the services sector as the virus’ resurgence caused some governors to mandate new or additional service business restrictions. As a result, jobless claims have spiked, travel and hotel occupancy fell to even lower levels, and restaurant and other …Read More