The persistent flattening of the Treasury yield curve appears to still have legs, and that may be a sign of economic trouble ahead.
As Bloomberg details, on Wednesday, the minutes of the Federal Reserve’s September meeting revealed policy makers’ resolve to stick to their tightening path.
The yield curve's reaction to that un-data-dependent hawkishness is very evident... (worsened by today's strong 30Y auction)
Authored by Andrew Zatlin via MoneyballEconomics.com,
Total Retail Spend Grows On Hurricane-Linked Demand
First, I want to point out that the two hurricanes that have devastated Texas, Florida, and Puerto Rico have been horrible.
Hundreds of thousands, if not millions of peoples’ lives were affected. And their circumstances have changed dramatically over these past couple months.
BUT… these hurricanes were a positive for economists looking for a boost in spending.
"The world is full of bubbles," warns former fund manager Richard Breslow but that shouldn't stop you from buying 'em. In the latest capitulation of a former realist, Breslow's confessional clarifies what many, many market participants clearly believe (and what Goldman called "unusually bullish"), "The reality is, you don’t have to like equities to buy them. And that will remain true until it isn’t. For now, beauty is in the eyes of the holder."
After yesterday's stellar 10Y auction, today at 1pm the Treasury sold the last of three weekly auctions, by offering $12 billion in 30Y paper to eager buyers. And eager they were, with the high yield of 2.870% stopping through the When Issued 2.874% by 0.4 bps. This was the biggest strop through on a 30Y auction going back to October 2016.
The Fed is baffled as to why inflation remains so low.
It’s a clever move, given that the reason inflation is believed to be “low” is because the Fed has been purposefully understating inflation for years.
Perhaps the biggest fraud ever committed in financial history concerns the understating of inflation in the Unites States post-1971.