When the Fed says they’re not particularly concerned about inflation… it’s not because they’re not concerned. It’s simply that they know the economy cannot function with higher interest rates — not with the level of debt sitting on personal, corporate and government balance sheets.
They recently started slipping in the word “symmetric” to describe their inflation goal because it will accommodate a rise well above 2%. What this really means is that they failed to address the inflation elephant in the room (looking at you, oil and gas) but explained their inaction as a judgement that inflation isn’t a problem.
Bond investors are hip to these verbal contortions — meaning TNX has finally broken a minor trend line and can now take a crack at the one from last November.
Of course, as rates moderate, so will the dollar — unless an equity selloff driven by falling oil and gas prices keeps it on the rise.
Equity selloff? Not so fast, insists VIX. For now, at least, the algos are listening. But, I doubt they’ll be able to ignore the yelps of pain from oil and gas longs.
continued for members…
Sorry, this content is for members only.Click here to get access.
Already a member? Login below… |