OASIS FORUM Post by the Golden Rule. GoldTent Oasis is not responsible for content or accuracy of posts. DYODD.

Between September 2007 and March 2008, Crude prices surged from $74 to $110 (Bloomberg Commodities Index up 30% over this period), while 10-year Treasury bond yields dropped about 120 bps to 3.30%. The Bond market completely disregarded the inflationary surge, anticipating big trouble on the horizon. Is a similar dynamic at play these days? What might the bond market be sniffing out?

Posted by Richard640 @ 5:47 on May 15, 2021  

[yields on the 10 yr and 30 yr dropped yesterday]

Friday, May 14, 2021

Weekly Commentary: Un-Anchored

 
A BIG WEEK ON THE INFLATION FRONT

May 14 – Bloomberg (Catarina Saraiva): “The Federal Reserve’s policy is in a good place right now, said Cleveland Fed President Loretta Mester, while playing down signals from data that she warns will be volatile as the economy reopens… 

 

‘I think we’re in a good place right now with our policy and we’re going to adjust it as appropriate depending on how the actual recovery progresses,’ Mester said. ‘This is not the time to be adjusting anything on policy. It really is a time for watchful waiting, seeing how the recovery evolves.’”

How could $120 billion monthly QE and zero rates be “in a good place”? At least for now, if the Fed is not concerned with inflation risk, the Treasury market will not be bothered either. But I can’t help but contemplate the possibility that factors are supporting Treasury bond prices beyond Fed dovishness. 

 

 
http://creditbubblebulletin.blogspot.com/2021/05/weekly-commentary-un-anchored.html

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Post by the Golden Rule. Oasis not responsible for content/accuracy of posts. DYODD.