Indications of inflation are slipping away as the Fed nears the end of the taper

“In the next few meetings, we could take a step down in our pace of purchase,” Bernanke said in a question-and-answer session with the Joint Economic Committee….on May 22, 2013.

On the charts below, May 22, 2013 is circled.  Just comparing the level on that day with current levels, as tapering nears its end.  The ten year yield is indeed higher at 2.48% vs 2.04 when tapering was first hinted.  However, inflation indicators are all lower.  Red/gold pack spread was 182, now 176.  The German bund yield has collapsed…UST vs Bund has gone from 61 to 152.  Gold from 1370 to 1217.  Copper from 334 to 305.  CRB from 288 to 282 and Ten year treasury to the inflation index note from 230 bps to 195…right at the low from June 2013.  Not pictured, but EEM etf was 42.96, now 41.61.   I guess the point is that one of the Fed’s goals is to engender inflation to make the debt load a bit easier to bear.  As we near the end of tapering and a possible hike in short term rates, inflation indicators are faltering.

These are levels from May 22, 2013 and today

Ten yr yield                         204         Current 248

Red/gold pack spread    182         Current 176

US ten yr/bund spd        61           Current 152

Gold                                      1370       Current 1217

Copper                                 334         Current 305

CRB                                        288         Current 282

Ten yr treasury/tip spd    230          Current 195

Dollar Index                       84,35       Current  85.60

UST 2013

 

redgld 2013

 

golds 2013

 

copper 2013

 

CRB 2013

DOLLAR INDEX 2013

 

 

Posted on September 29, 2014 at 12:48 pm by alexmanzara · Permalink
In: Eurodollar Options

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