Ticker observes:
Dollar down 0.5%, Corn up 1.9%, Wheat up 1.2%, Oats up 4.5%, Soy up 1.5%.
We can add that petroleum is also floating up (NY futures.)
Has nothing, nothing, whatever, to do with deficits-being-monetized.
Nothing.
MORE:
...for the first time ever on Monday, the government sold inflation-protected bonds for a negative yield. As the Wall Street Journal put it in layman's terms: "This suggests investors are so terrified of inflation that they’re willing to pay the government money every year to buy insurance against it."
Nothing to see here. Move along.
Good ol' WSJ telling half the story again. Negative TIPS reflect uncertainity of future inflation AND deflation. It can ,and is, played both ways. The WSJ just doesn't like to talk about possible deflationary expectations because they continue not to believe that it's a real threat.
ReplyDeleteAnd commodities are up. The question remains whether global demand expectations for these goods have boosted prices or a weak dollar are to blame.
Either way, monetization can have consequences. We need to keep an eye on inflation expectations in commodity prices. No one on the side of Keynesian theory disagrees with that to my knowledge. At present, we need more inflation not less. This is clear.
Ya know, I'm gonna pile on here because the WSJ is loaded with a bunch of complete hackjobs and this kind of misinforming crap bothers me.
ReplyDeleteIn the VERY SAME article, a couple sentences after their B.S. about, "This suggests investors are so terrified of inflation that they’re willing to pay the government money every year to buy insurance against it." They write this little tidbit:
"The spread between the regular Treasury yield and the negative TIPS yield gets you what investors expect inflation to be in the next five years, and that’s a not-horrifying 1.68%."
Not horrifying? Ya thanks WSJ, a 1.68% TIPS Break-Even is BELOW the Fed. target STILL.
These people are paid to know what the hell they're talking about too. Using the word, "terrified" to describe the market's inflation expectations is just flat out bogus nonsense.
End of rant.