Better (Be) Different

With so much good news including in Europe where having suffered setback after setback this year, even that ridiculous situation is trending favorably again. It’s all coming up in exactly the right way, everything getting better or so it seems.

Why, then, aren’t bonds globally getting their coupons ripped off by desperate sellers running for the reflationary exits anticipating a world emergent and rip-roaring ready to go after its serious slipup? So much “excess” cash, so little time to spend it once shutdowns, lockdowns, and cutdowns come to their necessary ends.

It’s been just about two months since the Feb 24-25-26 calendar triangle of curiosities, and the data, at least, has gotten only better along the way. Uncle Joe’s big “stimulus” checks have cleared, the Chinese economy is said to be inviting Australia’s blistering rebirth, and Europe, again, is becoming less Europe-y by the week.

Something’s obviously missing here.

Back in early March, Fed Vice Chairman Lael Brainerd virtually stepped out of DC to webcast herself up to NYC if only to provide relatively brief remarks on where she believes the US system stands. Echoing Chairman Powell, there was far more caution in them than perhaps otherwise might have been expected.

Among that, a very clear display of inflation shyness inadvertently giving away a key piece of what it is that is still “missing”:

Likewise, while I will carefully monitor inflation expectations, it will be important to achieve a sustained improvement in actual inflation to meet our average inflation goal. The past decade of underperformance on our inflation target highlights that reaching 2 percent inflation will require patience, and we have pledged to hold the policy rate in its current range until not only has inflation risen to 2 percent but it is also on track to moderately exceed 2 percent for some time. [emphasis added]

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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