Bond Market Indicatorsby alphadawgg on August 18th, 2008 at 6:25 pm |
Yields on bonds continue on a downward trend, as oil continues to fall as well.
The 2-yr note sits at just under 2.4%, while the 5-yr note closed at 3.07% and the 10-yr at 3.82%. The fact that the bump upwards in the CPI last week has had no negative impact on the Treasury market, indicates a forward looking view of benign inflation.
The current trend of falling commodity prices is indicating the growing sentiment that inflation will fall, or at least be in check, going into the end of this year. This is also being reflected in the way the Fed Funds futures are trading, which are now predicting that the Fed will keep rates at 2% through the end of this year. In addition, the spread between the TIPS and the 10-yr note has narrowed to 2.18% from 2.56%. This is the smallest spread since January 2004.
All this is indicating that inflation is not as big a threat as it was 6 months ago.
Keep an eye on the meeting in Jackson Hole, WY this Friday, as Bernanke will be making opening comments on the financial stability of our nation and its banking system.
AD,
great post…
August 18th, 2008 at 8:02 pmImportant “tells” w. regard to the PM markets, as well.
‘Nake is looking for that “all clear” to cut to save the banks again, I’m sure.
Somehow, I feel I’m being transported back to 1990 Japan…
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August 18th, 2008 at 8:22 pmSo is deflation upon us?
August 18th, 2008 at 10:10 pmAside from commodity inflation, the country is riddled with deflationary pressures. Initially, I always believed we would endure big time deflation. However, the spike in commodities, temporarily, changed my mind.
The fact is: the lack of inflation does not make the economy better. It will be a minor assistance to the consumer, while wrecking the industrials (steel, ag and energy producers aka the worlds top tax payers).
August 18th, 2008 at 10:36 pmXLE keep an eye on this ETF….looks like a low risk long trade setup is forming here. Use yesterdays low as a potential stop
August 19th, 2008 at 10:04 amA Dawg there is an interesting book out there that is worth reading….The Fourth Turning…google the title then you can get a sense of what the book is about.
August 19th, 2008 at 11:11 amwell the DIG is flying…..volume on the XLE is nice and strong….
August 19th, 2008 at 12:28 pm