Wednesday, April 27, 2016

Inflation Is Going To Massively
Impact The World In 2016!
"U.S. Treasury yields have been on the rise and it’s not because the economic data has improved. It is because commodity prices are rising. The U.S. Citi Surprise index is at a two month low while the CRB index is at the highest level since early December. As to inflation expectations, the 5 year breakeven is up another 2 bps to 1.57%, the highest since July while the 10 year breakeven is at the most since August at 1.67%. The 2s/10s spread is just off the widest since early February .. What this may be saying is the Fed may be beholden to the soft economic data and not hike rates at the same time the inflation statistics continue to move higher because higher commodity prices will now join steady services inflation. Thus, the bond market will make the rate shift for the Fed. The sustainability of all this of course is where commodity prices go from here as many still believe we’ve only seen a dead cat bounce. I disagree and continue to believe that the bottom is in."
- Peter Boockvar
link here to the reference

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