Phony Inflation Scare
The idiots who have been saying that inflation is our main worry got out of the bond market a couple of months ago. They assumed yields on Treasuries would climb (and prices fall) as all the new issues to fund the stimulus flooded the market. They looked pretty dumb this week as per Vince Farrell.
The Treasury’s auction of ten-year bonds was very successful and quite a surprise. The yield was 3.37%, and this bond traded at 3.50% just two weeks ago. The bid-to-cover ratio was a very strong 3.28 times, and the last few auctions of ten-year debt averaged 2.42 times. Indirect buyers, mostly foreign, were 43.9% of the total against a recent average of 27.8%.
U.S. Treasuries are still the investment of choice for those looking for a safe harbor. As the chart at the top shows, yields across the curve are lower than last year and last week. Yes gas is more expensive because the dollar is weak, but the overcapacity of so many sectors is making inflation the least of our problems.
http://finance.yahoo.com/echarts?s=%5ETNX#chart2:symbol=^tnx;range=3m;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
http://finance.yahoo.com/echarts?s=%5ETYX#chart4:symbol=^tyx;range=3m;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
http://finance.yahoo.com/echarts?s=%5ETNX#chart2:symbol=^tnx;range=3m;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
http://finance.yahoo.com/echarts?s=%5ETYX#chart4:symbol=^tyx;range=3m;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
Yah, Morgan, you keep it up, yahoo…
In the meantime, I’m sure there’s absolutely nothing to this little fable,, and it’s all okay, just everyone be calm, the adults are in charge, everything’s under control…
Yah, Morgan, you keep it up, yahoo…
In the meantime, I’m sure there’s absolutely nothing to this little fable,, and it’s all okay, just everyone be calm, the adults are in charge, everything’s under control…
And here’s some REAL Yahoo! for you, courtesy of the ever-disingenuous Timothy ” I did not have sex with that derivative” Geithner.
Oooooh, “blindsided we were… regulate now we must…”
Didn’t yer Grannie Mae teach ya that it don’t do much good ta close the barn door after all the bulls have bolted?
And here’s some REAL Yahoo! for you, courtesy of the ever-disingenuous Timothy ” I did not have sex with that derivative” Geithner.
Oooooh, “blindsided we were… regulate now we must…”
Didn’t yer Grannie Mae teach ya that it don’t do much good ta close the barn door after all the bulls have bolted?
Thank you, Jon. As corroborated as it is, good news for the bonding stallwarts, as long as inflation holds relatively flat. Don’t you, however, expect inflation to spike once this administration’s mischief kicks in?
Thank you, Jon. As corroborated as it is, good news for the bonding stallwarts, as long as inflation holds relatively flat. Don’t you, however, expect inflation to spike once this administration’s mischief kicks in?
Hugo, that’s the wrong question. And Jon tacitly admits it with this post.
The point is Obama WILL continue spending UNTIL inflation rears its head. I’m personally ambivalent about that fact because I view the entire process like a rubber band – the farther and tighter it gets pulled the faster and harder it comes snapping back. Jon admits it by trying to cover a flank he feels is exposed by saying “SEE, right now we can keep spending!”
The question is WHY if we know Obama will HAVE TO STOP deficit spending eventually, Jon and Co are not more careful about what new spending they they initiated first, second, third…
I posit the same amount of money could be spent, but it could be spent more on liberal agenda items, and the independents wouldn’t freaking out so hard already… if the administration was strategic in their ordering.
“Stimulus for jobs” was the wrong thing to do… it means if there are no jobs, all other claims of positive liberal spending are less likely to be believed.
The same goes for the auto bailouts. And soon the CA bailout (altho, I’m still hoping Obama won’t bend over for CA). These should have been shelved so Obama could focus on healthcare right from the get go.
Hugo, that’s the wrong question. And Jon tacitly admits it with this post.
The point is Obama WILL continue spending UNTIL inflation rears its head. I’m personally ambivalent about that fact because I view the entire process like a rubber band – the farther and tighter it gets pulled the faster and harder it comes snapping back. Jon admits it by trying to cover a flank he feels is exposed by saying “SEE, right now we can keep spending!”
The question is WHY if we know Obama will HAVE TO STOP deficit spending eventually, Jon and Co are not more careful about what new spending they they initiated first, second, third…
I posit the same amount of money could be spent, but it could be spent more on liberal agenda items, and the independents wouldn’t freaking out so hard already… if the administration was strategic in their ordering.
“Stimulus for jobs” was the wrong thing to do… it means if there are no jobs, all other claims of positive liberal spending are less likely to be believed.
The same goes for the auto bailouts. And soon the CA bailout (altho, I’m still hoping Obama won’t bend over for CA). These should have been shelved so Obama could focus on healthcare right from the get go.
Morgan,
It may be the wrong question as long as you don’t hold bonds. I do, and as such I take Jon’s anti-inflationary news as good news.
Yes, I agree with you that the money might be tighted up on other things, stupid things. But the dollars such as they are are meant to be speant on promising projects upon which the People agree. As long as ambient inflation doesn’t take it all away.
Morgan,
It may be the wrong question as long as you don’t hold bonds. I do, and as such I take Jon’s anti-inflationary news as good news.
Yes, I agree with you that the money might be tighted up on other things, stupid things. But the dollars such as they are are meant to be speant on promising projects upon which the People agree. As long as ambient inflation doesn’t take it all away.
ETFs.
ETFs.