Reflation Amplitude, Important, What About Frequency?

It’s understandable, even natural to focus on the amplitude of this or any BOND ROUT!!! and make comparisons to past reflationary trends on that basis alone. But what about frequency? By that, I don’t mean how frequently reflation shows up, though it has been fairly regularly if only because we never get any of that inflation and recovery predicted during each one.

Hysteria the only mainstream byproduct.

Maybe better characterized as duration (though not wanting to get that confused with the bond factor) or length of time. If we have some idea, like amplitude it might give us a sense if we’re closer to its beginning or end.

How long might we expect reflation to last?

The answer: it depends. Not surprising, it’s important to realize that no two have been the same thus far. Therefore, maybe a better pair of questions would be like this: first, would it be unusual if the current reflationary run was somehow brought to an end in the near future? Meaning, does reflation itself take some minimum amount of time?

Second, at the other end, from past experience can we determine if there some kind of maximum, or ticking clock?

A lot depends upon what market price/indication you choose and other parameters, too (how you date beginning and end, for instance). For our purposes, we’ll stick to the nominal 10-year benchmark US Treasury yield for the sake of simplicity.

The longest frequency iteration, Reflation #3, was also the smallest in amplitude. Only reaching 3.24% at its zenith in November 2018, it had been impressive at least in how long it took to get there. Beginning back in early July 2016, this was more than two years and it fought through several bouts of volatility (each one declared its own BOND ROUT!!!) to eventually wind as far upward as it could reach.

At the other end of the scale, Reflation #1B lasted a matter of mere months; from early October 2010 only to February 2011. This was actually less time than the current trend has been underway, and along almost the entire way QE2 had accompanied it.

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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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