Will inflation change the direction of the 10Y yield at long last?

Published: Tue 12 April 2022
Updated: Tue 22 November 2022
By steve

In Markets.

Tuesday 12, April 2022

Does central bank tightening actually ever make a difference to measured inflation?

Will people feel better off after the pandemic than before?

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US CPI hit 8.5%. Oil (WTI front month) went up 6.8%, to above $100 a barrel again. Bonds were fairly subdued: supply shocks may yet provide enough tightening to avoid hitting full employment and the resultant change into excess demand driving inflation. It seems likely that the US economy may be approaching full employment. We are not there, but the bounce from the extreme slackness of Q2 2020 looks likely to overshoot, provoking an over-reaction from the Fed which plunges the world into recession … just as it did for every recession since 53-54, with the sole exception of the Covid panic of 2020.

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