Loading ...They are not a gold bug site but looks at all sectors. This is the first time I’ve seen this and been getting emails summing things up regularly for years.
Conclusion
Strong annual CPI growth is partly due to base effects, from low readings in May 2020, but the sharp acceleration in recent months is a warning that the Fed should not ignore. The fall in long-term Treasury yields is not a sign that inflation expectations are easing but rather that price signals are broken. The Fed is purchasing $80 billion per month of Treasuries (and a further $40 bn of MBS) to support demand, while Treasury has slowed issuance by running down its $1.6 trillion general account (TGA) at the Fed. Between the two, they can set prices wherever they please.
We expect strong inflation, with a target of 4.60% p.a., and real interest rates deeply negative as the Fed and Treasury do their best to suppress bond yields. We are therefore underweight bonds and growth equities and overweight precious metals and commodities.
Quote for the Week
The ideas of economists and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of some defunct economist.
~ John Maynard Keynes