More Proof: Deflation Is The Future
Consumer Prices The Consumer Price Index (CPI) rose +0.4% in April (4.95% Y/Y). Core services (ex-housing), an important sub-index for the Fed, came in a little hot at +0.4% M/M (vs. +0.3% in March). In our view, this alone isn’t likely to cause the Fed to raise the Fed Funds rate yet again when it […]
The Seeds of Deflation – Sewn by the Fed
Despite the many announced layoffs these past few months, the unemployment rate decreased to 3.4%. That’s tied for the lowest level since 1953. Of course, the politicians will take heaps of credit, but the fact is that it fell, not because of job growth, but because people left the labor force, which is really not […]
Deflation is the Future
Most of the panic from the mid-March bank runs seems to have dissipated. But, we caution, most of the real fallout lies ahead as banks move into restructuring mode, which will only serve to deepen the Recession. There are still some “Nervous Nellies” on the Street when it comes to the Regional Banks. On Wednesday, […]
Markets Now Recognize Approaching Disinflation
The CPI came in at +0.4% M/M for October, much better than the +0.6% consensus estimate, and the Y/Y number, a favorite of the Fed, fell to 7.7% from 8.2%. The financial markets rejoiced. The tech-heavy indexes, which had been hit hardest in the markets’ recent selloffs, rose the most. The Nasdaq rose 7.9% on […]
The Recovery Stalls; Fed Pledges “Lower for Longer;” Equity Markets Pause
With the Fed pledging to keep rates low even when (or if) inflation rises above its 2% target, it is hard to see why long-term Treasury yields (and those of other quality issuers) won’t move toward yields of similar debt in the world’s other industrial economies (i.e., Europe and Japan). The economic lull is now […]
The Inflation Scare
Interest rates backed up last week. The 30-year T-Bond, which was 1.19% on August 4, closed at 1.44% on Friday (August 14). The 10-year T-Note closed at 0.71%. It was 0.52% on August 4. The CPI showed up with a +0.6% M/M rise (7.4% annual rate) for July. That pushed the Y/Y rate to +1.0% […]