Is this 40-Year Inflation Trend Over? When it comes to inflation, I continue to pay attention to the 5-Year, 5-Year Forward expectations... which trade at a very modest 2.33%. And whilst inflationary pressure will not ease a great deal over the coming 12+ months (maybe longer) - beyond that the market sees mean reversion.
Bond Yields and Dollar Surge on Powell Re-electionPersonally, I don't think there's been a more dovish Fed Chair in history than Powell. And whilst some say he is arguably more 'hawkish' than Brainard... he's a dove. Here's $4.24 Trillion reasons...
6.2% YoY CPI… Nice Work Fed!Inflation is easy to explain: it's excess money chasing too few goods. Milton Friedman put it like this: "it has always been (and always will be) a monetary problem". To that end, look no further than the Fed with money creation.
What Gold Needs to RallyThe precious metal caught a bid the past few weeks... most notably after 10-year bond yields pulled back. This move has some asking whether gold is about to rally - especially given the Fed's easy money policies and hotter-than-expected inflation for longer?
Fed Gives ‘Green Light’ to SpeculatorsYesterday my closing comment was "... my feeling is the Fed will not want to knock equities off balance". True to form - they didn't. The most dovish Fed President in history delivered exactly the words the market wanted to hear. i.e., the tab remains open.
The RBA’s Dilemma… When Things Go WrongThis week we will hear from the Fed on monetary policy...They're expected to not only announce imminent plans to reduce their $120B monthly bond purchases (as early as November) - but are likely to shed more light on their timing of rate rises.
“Bits vs Bytes” for Big Tech EarningsThe collective market caps of Google, Microsoft, Amazon, Facebook and Apple are north of ~$9 Trillion. To put that into perspective, the entire sum of the S&P 500 is ~$38 Trillion; FMAGA is ~24% of the entire market.
Big Tech Earnings on Tap… as Bond Yields JumpEarlier this week I said bond yields are now calling Jay Powell's bluff. My take is bonds sense higher inflation ahead (at least for next year). And as we know - 'bond markets are typically early... but generally right'...
Jobs Disappoint (again)… But Yields RiseThere are two monthly data 'prints' (above all others) which are said to shape the Fed's timing on any imminent taper: (1) employment; and (2) inflation. Re the former - hiring in the U.S. fell far below expectations last month, with employers adding just 194,000 jobs versus the expected 500,000
Yields Consolidate as Stocks ExhaleStocks caught a small bid as bargain hunters started to sniff around. That's expected after a few days of selling. Yesterday I suggested that yields would likely consolidate after a furious run - and this is what we saw. The 10-year bond yield pulled back to 1.46% - down 9 basis points from yesterday's 1.55%.
