In the meantime, see this FT article
on.ft.com/2SbAzkf
The pandemic has caused spending patterns have changed more than anytime in history.
1/4
on.ft.com/2SbAzkf
The pandemic has caused spending patterns have changed more than anytime in history.
1/4
So the inflation measures now overweight stuff we don't buy as much, like subway passes, restaurants and business attire, which are falling in price. and underweight things we spend a lot more on, like groceries, bicycles, and used cars, which are rising in price.
2/4
2/4
As noted in the FT, Harvard professor Alberto Cavallo took a stab at this and found that US inflation may have been underestimated by 5.5% over the course of 2020.
To repeat, inflation last year was near 7% according to his studies. And it is probably higher this year.
3/4
To repeat, inflation last year was near 7% according to his studies. And it is probably higher this year.
3/4
Inflation is irrelevant until ylds react.
And this is why I think a yield break higher leading to demands the Fed react. We prefer to stand on our head to not see inflation ("transitory!"), and use the circular logic of the Fed buying bonds and no yld break to justify it.
4/4
And this is why I think a yield break higher leading to demands the Fed react. We prefer to stand on our head to not see inflation ("transitory!"), and use the circular logic of the Fed buying bonds and no yld break to justify it.
4/4
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