At some point there is going to be a sea change in bonds. The question is does the last week in July finally cause the Sea-Change in Bonds?
These are two areas where the Federal Reserve might want to consider in their overall evaluation of the effectiveness of the ZIRP Experiment. I think the counterfactual case in these two examples is quite compelling.
How stupid do you have to be to send a commercial flight over what essentially is a warzone? How much do you think the airline actually saved by taking the most direct route?
Janet Yellen is always one step behind. If people start to ask you "Are you fat?", then you ARE fat!
Market participants are far too levered up, all on the same side, and well behind the monetary normalization curve of when the first rate hike is actually going to occur.
The government now has another measure which under-reports inflation by accounting chicanery...
The central banks need to downplay inflation, under-report it to justify their policies of the last five years...
Once Central Banks get out of markets, and I know some critics think that once they get in they are here to stay, healthy volatility and actual price discovery should come back to asset classes.
An interesting dynamic taking place in financial markets on Thursday as Gold saw some substantial buying interest up $22 to the $1295 an ounce area.
Yellen has got to be the most dovish Fed chairperson going into the most important policy initiative withdrawal phase ever to be recorded since the inception of the Federal Reserve!
There has been a lot of money made by being patient waiting for the events to play out, and then coming in and shorting the Oil Markets the last five years.
You can ignore and even downplay for a while, but eventually and as sure as the fundamental law of nature that everything has a cost....
We believe Jeffrey Gundlach, et al. are wrong regarding the 10-Year Bond yield staying below 2.80% over the second half of the year.
One major factor to the slow growth/low inflation in the U.S. is the Wall Street Yield Trade. By incentivizing unproductive use of capital, low interest rate via monetary policy is actually deflationary.
Have you become conditioned to always see the negative at the expense of missing the bigger picture?