Posted on 12/10/2021 9:18:25 AM PST by SaxxonWoods
Despite inflation broadening beyond problem sectors like used cars, the early bond market reaction to today’s CPI print suggests that markets are expecting the Federal Reserve to react marginally slower to inflationary pressures.
This is good news for a Fed that has come under increasing pressure to hike rates against elevated inflation. The strength and speed of the recovery, especially relative to past recessions, has made it difficult for some to come to grips with the features that would distinguish “transitory” from “persistent” inflation, with calls for hikes reminiscent of 2015 Fed policy. In light of that ambiguity, Fed Chair Jay Powell has moved away from the term “transitory” in recent press conferences, preferring instead to emphasize the new “broad-based” nature of inflation.
Despite the hubbub about tapering asset purchases, the Fed has provided clear forward guidance on the path of interest-rate policy: Rates will not rise until inflation is above target and labor markets have recovered to the Fed’s goals for near-term maximum employment.
(Excerpt) Read more at marketwatch.com ...
The interesting thing right now is how the Bond Market is not joining the FED in worrying about inflation yet. Since the Bond Market is bigger than the FED and controls all interest rates except the overnight (the only rate the FED controls), the FED has narrow path, making things a bit easier to predict.
And as always, I remind myself that prospering is MY job, not anyone else's. Full speed ahead, pulled it off under Obama and will do the same under the idiot Biden (who is really just Obama II).
As I understand it, inflation is approaching 10%. Which I guess is good news, since many would expect it to be higher with Biden’s ruinous policies. It’s just awesome that interest rates for savings are effectively negative, wages are effectively dropping, and prices rise daily. No wonder the Fed seems pleased.
I bought a new car in July. Now it’s worth more than I paid for it — a lot more. Of course, I won’t have to sell it for another 150 thousand miles.
“…It’s just awesome that interest rates for savings are effectively negative, wages are effectively dropping, and prices rise daily. No wonder the Fed seems pleased.”
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Yep, the mission to weaken and impoverish America’s middle class is exceeding beyond all the DemocRATS’ wildest expectations,
2021 was by far our most prosperous year since 2007. Considering we started the new year with Covid infections, it turned out pretty good.
My job is the same as it was when inflation was 14% in the late 70’s, the same as when Volker took interest rates to 20%, killing energy and real estate, it’s the same as it was when the housing market crashed in 84 (right after I bought a house) and when it crashed in 2008, my job never changes. The only thing that changes is what I need to do to survive and prosper.
It’s up to me to prosper under whatever the current conditions are. I owe that to myself and my immediate and extended family. No one is going to do it for me, not the FED, not a President, not a Congress, not a boss.
None of them can stop me either. I can only stop myself. It’s my responsibility, and if I don’t prosper it’s my fault, not anyone else’s. There have been a lot of ups and downs since the 70’s, what a ride.
Congratulations and keep at it!
Real earnings (wages and incomes) are not keeping up with inflation, and the spread has gotten worse over the last year. This is what bond investors know that retail investors don’t know.
Wahh-wahh, the road to success.
/sarc
“Real earnings (wages and incomes) are not keeping up with inflation, and the spread has gotten worse over the last year. This is what bond investors know that retail investors don’t know.”
So why is the real net worth of Americans higher than ever?
“I bought a new car in July. Now it’s worth more than I paid for it — a lot more. Of course, I won’t have to sell it for another 150 thousand miles.”
My 12 year-old truck with 134K on it is probably worth a good bit too. Wouldn’t give it up, it’s a great truck and it’s been paid for since day one.
Very positive way to look at things.
134K on a full size pickup is barely broken in, especially if it’s a V8.
Equity values levered by margin and inflated real estate valuations. Both with revert to the mean.
“Very positive way to look at things.”
Thanks, negativity has never made me a penny but optimism has paid me more than I ever dreamed it could. That doesn’t mean mindless optimism, it means there’s always a way forward, and my job is to find it and exploit it.
If I don’t, that’s my problem.
“So why is the real net worth of Americans higher than ever?
Equity values levered by margin and inflated real estate valuations. Both with revert to the mean.”
Exactly, and our job is to navigate those waves to our benefit. Good luck with your work in that area.
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