Bonds: More Turmoil Ahead

The YoY change in gas prices is highly correlated with CPI which, in turn, is highly correlated with interest rates. If December’s headline CPI (due out at 8:30 AM tomorrow) continues to track the YoY increase in gas prices, it could easily top 2.3-2.4%.

What would the impact be on bond yields? And, how would stocks respond? The last time CPI topped 2.5% was in October 2018, marking the beginning of the 20% correction.

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