Reflation Or Inflation?

www.investing.com/analysis/reflation-or-inflation-200561538

By Ashraf Laidi | Feb 18, 2021 12:56AM ET

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by Adam Button

We couldn't read an article or watch financial TV for any stretch on Tuesday without hearing the worlds 'inflation' and 'reflation' but the Fed continues to preach that they will look beyond short-term price rises. The pound was the top performer while the yen lagged. Meanwhile, Ashraf shares a few charts—the upper left chart shows how the break out in real yields is (red graph) is threatening gold, which is boosting the US dollar (lower left chart, while Gold/Silver ratio remains pressured but supported.

GOLD-SILVER-REAL-USD Chart

US 10-year yields busted through the 1.20% barrier on Tuesday, piercing a double top and promptly running to 1.30%. US 30-year broke through 2% in a similar manner.

The moves in bonds kicked off a big bid in the US dollar and USD/JPY hit a 4-month high at 106.00.

The market is increasingly focused on the post-vaccine economy and the likelihood (certainty?) that prices will rise with the surge and demand and against the backdrop of very easy y/y comps.

The trigger this week may have been energy with WTI following Brent above $60 and natural gas prices surging on cold weather. Lumber and metals prices are also at multi-year highs while consumer goods continue to be short supply.

The Fed introduced a new communication angle on Tuesday with SF President Daly saying “unwanted” inflation is not a practical risk and that fear of inflation could cause millions of jobs.

We'd argue that real inflation could unchecked by a complacent Fed cause millions more but that's the debate that will rage in markets in the months ahead.

As for bonds, the break higher leaves little standing in the way of 1.50% in 10s but so far equity markets have taken the medicine without a hiccup.

GBP/USD Sinks After BoE, Fed: Is More Downside in the Offing? By Fawad Razaqzada - Sep 21, 2023 3

GBP/USD analysis: BoE holds policy at 5.2% in split decision What’s next for GBP/USD, and will US dollar rise much further? GBP/USD technical analysis continues to point...

USD/CAD bears still in control By Trading Point - Sep 22, 2023

USDCAD is in the red today, tests the support of the 200-day simple moving averageThe mixed momentum indicators complicate the outlookThe SMAs’ convergence could open the door to a...

GBP/USD Slips to 6-Month Low After BoE Hold By Kenny Fisher - Sep 22, 2023

Bank of England maintains interest rates Federal Reserve sends ‘higher for longer’ message to the markets The British pound has posted losses on Thursday. In the North...

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Central Banks

Interest Rates

Next Meeting

FED

5.50%

Sep 20, 2023

ECB

4.50%

Oct 26, 2023

BOE

5.25%

Sep 21, 2023

SNB

1.75%

Dec 14, 2023

RBA

4.10%

Oct 03, 2023

BOC

5.00%

Oct 25, 2023

RBNZ

5.50%

Oct 04, 2023

BOJ

-0.10%

Sep 22, 2023

CBR

13.00%

Oct 27, 2023

RBI

6.50%

Oct 06, 2023

PBOC

3.45%

BCB

12.75%

Sep 20, 2023

US 30	34,098.2	+27.8	+0.08%
US 500	4,340.3	+10.3	+0.24%
Dow Jones	34,070.42	-370.46	-1.08%
S&P 500	4,330.00	-72.20	-1.64%
Nasdaq	13,223.99	-245.14	-1.82%
S&P 500 VIX	17.17	-0.37	-2.11%
Dollar Index	105.290	+0.246	+0.23%

Crude Oil WTI	90.55	+0.92	+1.03%
Brent Oil	93.99	+0.69	+0.74%
Natural Gas	2.643	+0.033	+1.26%
Gold	1,946.20	+6.60	+0.34%
Silver	23.977	+0.290	+1.22%
Copper	3.7405	+0.0445	+1.20%
US Soybeans	1,299.25	+5.25	+0.41%

U.S. 10Y	4.474	-0.008	-0.18%
U.S. 30Y	4.556	+0.004	+0.08%
U.S. 5Y	4.602	-0.015	-0.31%
U.S. 3M	5.516	+0.032	+0.58%
US 10Y T-Note	108.47	+0.05	+0.04%
Euro Bund	129.66	+0.06	+0.05%
10-2 Yield Spread	-77.46	-4.50	6.17%

Apple	173.93	-1.56	-0.89%
Alphabet A	130.44	-3.30	-2.47%
Tesla	255.70	-6.89	-2.62%
Amazon.com	129.32	-5.97	-4.41%
Netflix	384.15	-2.15	-0.56%
Meta Platforms	295.73	-3.94	-1.31%
Bank of America	28.05	-0.50	-1.75%

Reflation Or Inflation?

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