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Inflation continues to disappoint

Published 09/29/2017, 08:50 AM
Updated 09/29/2017, 08:50 AM
© Reuters.  Inflation continues to disappoint
  • One has to pause for a minute to appreciate the absurdity of today's inflation debate in which readings that are too low are a cause for concern. Yes, deflation as caused by a sharp contraction in credit probably isn't a good thing.
  • But if the general price level is barely rising, steady, or even slipping thanks to technological innovation, fresh sources of supply, or freer trade, is that a bad thing? From 1870-1900 - one of the greatest periods of economic growth in the country's history - the price level fell an average of 1.43% per year. It took $65 in 1900 to buy what $100 purchased in 1870.
  • Turning to this morning's news, the core PCE inflation rate - the Fed's preferred measure - rose just 0.1% in August, half of estimates. The year-over-year pace of core inflation was just 1.3%. Bond bears and Fed hawks are disappointed once again. The 10-year Treasury yield is down 1 basis point to 2.295%. TLT +0.2%, TBT -0.4% premarket
  • ETFs: TLT, TBT, TMV, TBF, EDV, TMF, TTT, ZROZ, VGLT, TLH, UBT, TLO, DLBS, VUSTX, TYBS, DLBL
  • Now read: Don't Get Caught Being Overweight Bonds

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