Bonds to Fed: There’s Nothing Transient About Low Inflation | Metals Mine

  • Bonds to Fed: There’s Nothing Transient About Low Inflation

    From bnnbloomberg.ca

    As the Federal Reserve clings to hope that U.S. inflation will revive of its own accord, the bond market is practically screaming for intervention. The Consumer Price Index rose 1.8% year-on-year in May, down from a 2018 peak of 2.9%. But the market’s view on where it’s headed is even more dire. As the 30-year Treasury bond’s yield slid below 2.50% Wednesday, its inflation-protected counterpart languished. As a result, the gap between the two yields, representing the average expected CPI rate over the life of the securities, briefly collapsed to 1.7%, the lowest since September 2016. While the Fed historically ... (full story)

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bigtx
Jul 3, 2019 7:34pm
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Bond, 30-year Bond... Sorry, had to with the headline.
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AnniLi
Jul 3, 2019 3:31pm
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Record highs for stock price indexes are misleading indicators of valuations. Price to profits ratios are much more sensible indicators if they are appropriately adjusted. By these measures stock prices are well below record. Positive views of future profits would sustain much higher price indexes.

Low long bond yields underline the potential upside for stocks with the inverse of a bond yield giving you a rough guide to P/E= 40 times.

Negative global outlooks raise extreme doubts about future economic growth but do lower inflation expectations and lower confidence.
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