Yield curve flattening trades will flatten you in the next six months. The march toward 4 percent on the 10-year will continue after record shorts square up positions just a little bit more.
Inflation moving higher.
Moreover, the supply/demand flow in the cash market is the most bearish it has been in almost 30 years. Real interest rates are much too low for such rapidly deteriorating technical conditions. We will expand on this tomorrow with some beautiful charts and data.
Would’t be surprised to see a “super spike” in long-term rates sometime soon.
Sorry, Secretary Mnuchin.
…recently introduced tariffs were reportedly key factors behind greater cost burdens in April. Moreover, the rate of input price inflation accelerated to the sharpest in almost seven years.
…“Warning lights are being flashed in relation to inflation, however, with factories reporting the strongest rise in prices for nearly seven years. Suppliers are hiking prices in response to surging demand, while tariffs and higher oil prices are also exerting upward pressure on costs. With the average price of goods leaving factories rising at the fastest rate since 2011, consumer price inflation looks set to accelerate.” – US PMI, May 1
Global Macro Monitor 