Tag Archives: inflation

U.S. Yield Curve Moved by Europe

The U.S. Treasury yield curve, as represented by the S&P U.S. Treasury Bond Current Indices, ended June 14, 2017, tighter (lower in yield) than the previous day.  The importance of June 14 is that it was the day on which the U.S. Federal Reserve raised the target rate by 25 bps, from 1% to 1.25%.  The following Read more […]

Inflation and the Fed

Despite today’s very low inflation the Fed keeps raising interest rates and is now discussing when to shrink its balance sheet to further tighten monetary policy.  The Fed’s own inflation forecast anticipates continued low inflation at 1.6% in 2017 creeping up to 2% in 2018 and 2019 and not seeing any increase later on. Moreover, Read more […]

A View of Central Banks in Latin America

On June 22, 2017, Mexico’s Central Bank (Banxico) made another hike in its policy rate, saying that it was consistent with the efficient convergence process of the 3% inflation objective.  For Banxico, this is the fourth adjustment of the year, and the 19th since Banxico started a rising rates cycle in late 2015.  With all Read more […]

Inflation, Rising Rates Can Spark Oil’s Rebound

In anticipation of the Federal Reserve’s policy meeting starting Wednesday that may raise the federal funds target rate, here’s what you need to know about how the decision impacts commodities. Historically rising interest rates are positive for commodities for two main reasons.  One is the return on collateral increases, pushing up the total return. The other reason Read more […]

100 Days Later in Mexico

100 days…is it a milestone?  Is it a key number?  I’m not sure, but everybody looks like they love to write about it, so I will too.  What I know is in Mexico we have a saying that goes, “If the U.S. sneezes, Mexico gets a cold.”  Following Dennis Badlyans’s post “Does the Outperformance of Read more […]

Inflation

Supported by a stronger economy and higher oil prices, recent readings of inflation are rising. The Fed’s principal gauge, the personal consumption expenditures deflator excluding food and energy (Core PCE) is approaching but still below its 2% target. The more widely recognized CPI and CPI excluding food and energy are both rising and a bit Read more […]

The Turning Point

Thirty-five years ago on September 30, 1981 the 10 Year treasury yield peaked at 15.85%.  With a few bumps it has slid downward ever since – until now. The events of the last few weeks moved interest rates higher and added about 25 bp to the ten year treasury.  Even allowing for some near-term volatility Read more […]

Rising Rates and Inflation: Implications for Equities

Even a cursory glance at financial markets indicates that market participants are expecting some form of interest rate increase in the near future—there has been a sell-off in the 10-Year U.S. Treasury Bond market, and certain sectors that are expected to benefit from such a rate increase have gained.  For instance, the S&P 500 Financials Read more […]

Why Cutting OPEC Supply From Highest to Higher Still Hurts

After OPEC agreed to an oil output cut in Algiers on Sep. 29, they increased supply by 230 kb/d to a record 33.83 mb/d in October according to the International Energy Agency (IEA).  Supply from Iraq reached the highest level ever and Iran pushed flows to a pre-sanctions rate of 3.72 mb/d. Now OPEC supply has Read more […]

Gold & Silver: Fed Rate Hike Vs Mine Supply

Two factors tend to consistently influence gold and silver — interest rate expectations and mining supply.  Changes in interest rate expectations typically exert a short-term, day-to-day influence that is exogenous to the metals market while mining supply has a long-term, year-to-year influence that is endogenous. Precious metals prices seem to exert little to no influence Read more […]