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It’s time to discuss the real possibility of a renewed surge in inflation.

30-year long bond yield, monthly chart

On a monthly chart, the long bond yield is approaching but not quite at a two-decade old resistance near 5.25 percent.
 

Ascending Triangle

30-year long bond yield, ascending triangle

On a weekly basis, the 30-year long bond is is an ascending triangle pattern.

Technically, the expected resolution is higher. A move above 5.09 percent would be a breakout. Long-term resistance would then be short step away at ~5.25 percent.

The short-term view looks ominous.

30-year Long Bond Last 12 Months
 

30-year long bond yield, symmetrical triangle

Across all time frames, yields look poised to rise, technically speaking. Short-term, we have seen a breakout from the apex of the symmetrical triangle near 4.80 percent.

The long bond was up nearly 8 basis points today to 4.915 percent. The next resistance is 5.09 percent, with long-term resistance at 5.25 percent.

Technically, the setup looks stagflationary.

Supporting the Stagflation View

• The price of gold, silver, and copper at record highs
• Medical insurance prices
• Wars and threats of war by Trump
• Deficit spending, which both parties want to increase
• K-Shaped Economy fueled by upper-end spending
• An AI speculation boom with no profits
• Tax refunds will support more spending
• Minimum wages hikes in 19 states will support more spending
• Trade wars
• Weak jobs

This is one sick economy led by AI, upper-end spending, and deficits.

It’s possible a collapse in jobs sinks the economy enough that demand crashes. Also, a stock market crash would kill demand at the high end. And we could see a big decline in the price of rent.

Two Market View

• Long Bond: Technically and fundamentally, the long bond and gold charts appear to be signaling stagflation.
• Fed Fund Futures: However, the Fed Fund Futures expect two more rate cuts this year, in June and November or December. This is the near-universal consensus.

I am not predicting a hike, but it would not surprise me much.

Contrarian View

A hike does not seem to be on anyone’s radar. So please consider Bob Farrell’s Rules of Investing.

Rule #9: When all the experts and forecasts agree – something else is going to happen.

Who else is discussing a hike?

Coming Up

I will do another post on gold and silver shortly. I also have an update on the cost of medical insurance from a Personal Consumption Expenditures (PCE) point of view.

The PCE is the Fed’s preferred measure of inflation.

I expect to see a big divergence between the PCE and the CPI and will explain shortly.

The Fed says it is in a good place. That I am sure is wrong, one way or another.

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