Tag Archives: CPI

Jun 12, 2018

Low Inflation isn’t Unusual

Fed watchers and bond holders worry that inflation could spike, tempting the Fed to boost rates much farther than the current half percentage point the market expects in the rest of 2018.  With the Federal Open Market Committee, the central bank’s policy makers, meeting today and tomorrow these concerns are front and center.  This morning’s…

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May 16, 2018

Inflation: Benign for Now

Having broken through 2% in January 2018, the 10-year U.S. Treasury breakeven rate (as measured by the difference between the S&P U.S. Treasury Bond Current 10-Year Index and the S&P U.S. TIPS 10 Year Index) has continued to increase, reaching a YTD high of 2.18% on April 23, 2018. As of May 14, 2018, the…

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Feb 14, 2018

3 Reasons To Love Equities When Rates Are Rising

Equities haven’t been the most lovable asset class lately but there are reasons to love them despite these prickly times.  The first reason to love equities in rising rate times is that they have gained significantly. Since 1971, the S&P 500 (TR) has gained about 20% on average in rising rate periods, has gained 8 of…

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Feb 12, 2018

Inflation News and Fears

Two weeks ago inflation fears sparked by a surprise jump in wage gains sent the markets into a tail spin. This week will deliver two rounds of inflation news with the Consumer Price Index (CPI) on Wednesday and the Producer Price Index (PPI) on Thursday.  Month to month changes in both the CPI and PPI…

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Feb 7, 2018

Energy Stocks Beat Oil Futures In Rising Inflation

There may be a legitimate concern about rising inflation since inflation has been under the Fed’s target for years and there is now very low unemployment with signs of accelerating economic growth.  The low unemployment rate and strong growth are probably positive for the stock market and the tax cuts may provide even more upside.  However,…

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Nov 23, 2015

Dollar’s Revival Adds New Life To These Commodities

It makes sense that a strong US dollar is generally bad for commodities since as the U.S dollar strengthens, goods priced in dollars become more expensive for other currencies. However, historically the U.S. dollar has a negative correlation of only about -0.30 with the S&P GSCI as shown in the chart below using data since 1970: This may…

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Jun 18, 2015

Asia Fixed Income: A Closer Look at Indian Bonds

The CPI inflation rate in India rose as expected to 5.0% year-over-year in May 2015(from 4.9% in April), led by a higher crude oil price.  The market is now expecting the Reserve Bank of India to remain on hold, in contrary to their expectation that most other emerging market policy rate decisions will have a…

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Mar 2, 2015

February Made Bonds Shiver, While Energy Kept High Yield Warm

Investment-grade corporate yields widened by 15 bps, as the yield-to-worst of the S&P U.S. Issued Investment Grade Corporate Bond Index moved from a level of 2.16% at the beginning of the month to 2.76% at the end of month.  The price return of the index was -1.44% MTD, but 30 bps of coupon return brought…

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Jan 12, 2015

Are TIPS Insurance on a Sunny Day?

The current quote of NYMEX crude is lower by $2 today as the price action of crude oil has been on a downhill slide since the end of June 2014.  The news is loaded with stories of oil and its effects on consumers and the economy.  Min Zeng of the Wall Street Journal published “Closely…

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Dec 10, 2014

Low Chinese CPI: A Commodity Catalyst?

Following weak Chinese economic data, several headline stories broke about commodities crashing although the only sectors with consistent losers are energy and grains.  One news story stated, “Copper prices resumed their decline on Wednesday, after data showed that inflation in China slowed to the lowest level in five years, underling concerns over a slowdown in…

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