I posted on Friday a chart of the 30 yr bond on my blog that I know a few of you have seen. All of these discussions about the fed and inflation can be seen graphically in what is actually happening in the marketplace. There are a few things developing that could indicate a low in price ( high in yield ), setting up. The one critical component missing is Gold is out of line for a big rally so far.
We are at a very important inflection point with the 10 and 30 yr contracts right here. Rates have stayed low due to foreign buying ( the carry trade ) and hedge fund buying. Further, mortgage companies have narrowed their margins quite a bit to compete, also keeping rates lower.
I have been of the belief that inflation is much more prominent than these insulting govt reports tell us. Well let’s see, if we take everything out of the report that is inflating ( the ex food and energy comments ), then what is left shows low inflation.
I do not believe the fed is near done yet, unless we get a massive stock selloff, or commodities selloff. That goofy Michigan Sentiment report ( which most traders make fun of ) showed an alarming drop in it’s recent release.
Even though that report is a joke, maybe it is the beginning of people on a national level pulling spending back.
