E Market Briefing For Wednesday, Jun. 16

The 'transitory' inflation camp predominates among analysts, while some of us that have seen versions of this movie before, know it's not quite so easy to divine. Even as housing and food start to come down (perhaps this Fall), we'll not likely drop anywhere near preceding pandemic era price levels.

Therefore 'sharper bumps' such as commodities have experienced won't stick entirely, but they'll also not decline dramatically. Remember the drought which is a problem, keep in mind wage levels from business to farming, have risen a lot, and a notion that accommodation is still needed dominates politicians (no allowance being made for the insanity of overstimulating and raising debt).

But for now, the Summit in Washington of the FOMC, exceeds that in Geneva between President's Biden & Putin. There's not much of a sense of successes at either, just a hope among those who think low rates forever is somehow the prescription for success. It's hard to believe they favor debasing the currency, but that's the outcome.. along with perils of excess speculation near highs.

Near-term the downside risk exists, but it depends on whether the Fed tries to outline a 'timing cycle' for tapering. Their language must not veer very much if they wish to give a 'stand pat' impression, when overtly grilled by aggressive reporters, in the news conference.

If the Fed 'does' diverge from a playbook (ECB's Christine Lagarde last week hinted at 'not' addressing reducing bond purchases for the foreseeable future) that would be problematic, since it is presumed ECB & Fed consult closely.

If the 10-year continues lower, be very cautious that it not spook markets 'as if somehow it knows' that a new round of disinflation, rather than inflation, might be on-tap. How could that occur? A geopolitical shock or 'more likely' COVID's surge, which already is hinting at excess complacency among most people.

1 2 3
View single page >> |

This is an excerpt from Gene Inger's Daily Briefing, which is distributed nightly and typically includes one or two videos as well as charts and analysis. You can subscribe more

How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.