Tag Archives: Deflation

Yield curve control, remember that one? For a little while earlier this year, the modestly reflationary selloff in bonds around the world was prematurely oversold as some historically significant beginning to a massive, conclusive regime change. Inflation had finally been achieved across multiple geographies, it was widely repeated, and this would create problems, purportedly, as these various places would have to grapple with higher interest rates. The idea behind...

Completing the monthly cycle, the ISM released its estimates for non-manufacturing in the US during the month of June 2021. The headline index dropped nearly four points, more than expected. From 64.0 in May, at 60.1 while still quite high it’s the implication of being the lowest in four months which got so much attention. Consistent with IHS Markit’s estimates as well as the ISM’s Manufacturing PMI released last week, there are growing (confirmed) concerns that...

Back at the end of May, Germany’s statistical accounting agency (deStatis) added another one to the inflationary inferno raging across the mainstream media. According to its flash calculations, German consumer prices last month had increased by the fastest rate in 13 years. Even using the European “harmonized” methodology (Harmonized Index of Consumer Prices, or HICP), inflation had reached 2.4% year-over-year which was the highest since 2012. Europe HICP and...

Initially, the dots got all the attention. Though these things are beyond hopeless, the media needs them to write up its account of a more fruitful monetary policy outcome because markets continue to discount that entirely. Dots look like inflationary success if possibly even now more likely, whereas yields and especially bills have (re)taken a more skeptical approach pricing almost no chance for it. Buried in the FOMC minutiae on Wednesday was an upward adjustment...

Inflation is more than just any old touchy subject in an age overflowing with crude, visceral debates up and down the spectrum reaching into every corner of life. It is about life itself, and not just quality. When the prices of the goods (or services) you absolutely depend upon go up, your entire world becomes that much more difficult. For those at the “bottom”, that much more unbearable (hello Communism!) The real issue in that situation isn’t that narrow slice of...

The Chinese were first to go down because they had been first to shut down, therefore one year further on they’ll be the first to skew all their economic results when being compared to it. These obvious base effects will, without further scrutiny, make analysis slightly more difficult. What we want to know is how the current data fits with the overall idea of recovery: is it on track, perhaps going better than thought, or falling short. Another set of huge positives...

According to newly revised BLS benchmarks, the labor market might have been a little bit worse than previously thought during the worst of last year’s contraction. Coming out of it, the initial rebound, at least, seems to have been substantially better – either due to government checks or, more likely, American businesses in the initial reopening phase eager to get back up and running on a paying basis again. The JOLTS labor series annual revisions took about...

The “too many” Treasury argument which ignited early in 2018 never made a whole lot of sense. It first showed up, believe it or not, in 2016. The idea in both cases was fiscal debt; Uncle Sam’s deficit monster displayed a voracious appetite never in danger of slowing down even though – Economists and central bankers claimed – it would’ve been wise to heed looming inflationary pressures to cut back first. Combined, fiscal and monetary policy was, they said,...

Fear of the ultra-inflationary aspects of fiscal overdrive. This is the current message, but according to what basis? Bigger is better, therefore if the last one didn’t work then the much larger next one absolutely will. So long as you forget there was a last one and when that prior version had been announced it was also given the same benefit of the doubt. Most people don’t like looking to Japan mainly because it is too depressing; unless one is an Economist who...

With the UST yield curve currently undergoing its own market-based twist, it’s worth investigating a couple potential reasons for it. On the one hand, the long end, clear cut reflation: markets are not, as is commonly told right now, pricing 1979 Great Inflation #2, rather how the next few years may not be as bad (deflationary) as once thought a few months ago. On the other hand, over at the short end, yields are dropping toward zero again. This steepening isn’t...