WHAT IS DRIVING INFLATION FEARS?
Updated
Commodities!
Here is a chart showing TIPS (Treasury Inflation-Protected Securities) vs TLT long-dated bonds.
As inflation fears rise TIPS outperforms TLT . (Color RED)
As the CRB commodity Index rose (Color Blue) TIPS outperformed TLT .
Now that the CRB INDEX is hitting 12-year resistance area it is likely to at least pause along with
inflation fears. If the CRB breaks out here we could see a wave of selling in bonds pushing yields
even higher. At some point, the FED will have to act with operation "TWIST" (buying more long
dated bonds rather than short) or increase QE .
From a social perspective expect people to start bitching about Food inflation and supermarkets.
Again IF the CRB breakout.
Here is a chart showing TIPS (Treasury Inflation-Protected Securities) vs TLT long-dated bonds.
As inflation fears rise TIPS outperforms TLT . (Color RED)
As the CRB commodity Index rose (Color Blue) TIPS outperformed TLT .
Now that the CRB INDEX is hitting 12-year resistance area it is likely to at least pause along with
inflation fears. If the CRB breaks out here we could see a wave of selling in bonds pushing yields
even higher. At some point, the FED will have to act with operation "TWIST" (buying more long
dated bonds rather than short) or increase QE .
From a social perspective expect people to start bitching about Food inflation and supermarkets.
Again IF the CRB breakout.
Note
Note how CRB and TIP/TLT pulled back simultaneously. Continue to keep an eye on this chart as it will signal where the 10 year is likely headed.Note
As expected Commodities (CRB) are pulling back against resistance.Gold is not looking good either.
Note
Someone is wrong (bonds or commodity traders)Note
Keep an eye on this going forward.
Real Macro Economic Investing
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