Inflation is going to massively impact the world in 2016!
Peter Boockvar: Following the poor 2 year note auction yesterday, the 5 year auction was just mediocre. The yield was above the when issued and the bid to cover was below the 12 month average. The upside was in the level of direct and indirect bidders which took about 70% of the auction vs the one year average of 66%…
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Peter Boockvar continues: Bottom line, US Treasury yields have been on the rise and it’s not because the economic data has improved. It is because commodity prices are rising. The US Citi Surprise index is at a two month low while the CRB index is at the highest level since early December. As to inflation expectations, the 5 year breakeven is up another 2 bps to 1.57%, the highest since July while the 10 year breakeven is at the most since August at 1.67%. The 2s/10s spread is just off the widest since early February.
What this may be saying is the Fed may be beholden to the soft economic data and not hike rates at the same time the inflation statistics continue to move higher because higher commodity prices will now join steady services inflation. Thus, the bond market will make the rate shift for the Fed. The sustainability of all this of course is where commodity prices go from here as many still believe we’ve only seen a dead cat bounce. I disagree and continue to believe that the bottom is in.
***KWN has now released the powerful audio interview with whistleblower Andrew Maguire and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***KWN has also now released the fascinating audio interview with top trends forecaster Gerald Celente and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
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