adaltos

Financial Markets. Macro Economics. Views are my own.

[adaltos @adaltos59]

(1/10) The continued steepening of the yield curve caused by the simultaneous rise in long-term US Treasury yields and decline in short-term US Treasury yields is telling an important story that investors should pay close attention to.

https://t.co/kfwR6vXnZV

[Holger Zschaepitz @Schuldensuehner]

The US yield curve keeps steepening amid unrelenting demand for short-term Treasuries, w/2s10s spread rises to fresh multi-year records. US 2y yields hit fresh All-Time low while US 10y yields jump to 1.16%.

[adaltos @adaltos59]

One of the best questions I've heard at a Fed testimony. It's unfortunate it did not result in a clear answer.

https://t.co/HbKMjakuKk

[adaltos @adaltos59]

@Fullcarry I think we'd be better off without the DOTs, but your point is valid. I suspect it will be clear that inflation remains below target well before rate hikes become a serious possibility b/c tapering will start first. Plus the wild card of reg changes altering HQLA preferences.

[adaltos @adaltos59]

@ScottMinerd @YouTube

[adaltos @adaltos59]

@Birdyword Sgt. Krugman’s Lonely Hearts UBS Band

[adaltos @adaltos59]

The beatings will continue until morale improves

[European Central Bank @ecb]

Lagarde: Negative interest rates have often been criticised because of their potential side effects. Our assessment continues to be positive as the benefits continue to outweigh the costs.

[adaltos @adaltos59]

With the small FOMC trial balloon, we see (1) Premature Fed tightening will have asymmetric impacts. (2) The risk of a policy mistake seems to be growing.

[Eric Basmajian @EPBResearch]

That's not supposed to happen with AIT

[Rishi Mishra @aRishisays]

Clarida: Key element of our mandate is price stability and a key factor for price stability is inflation expectations, and if that gets un-anchored (10y BE > 5Y BE), we should be ready to use the tools we have to deal with it. Not my baseline view, but attentive to that risk.

[adaltos @adaltos59]

@inflation_guy Yep. Based on wholesale prices, used retail car prices may not peak until mid to late summer.

[adaltos @adaltos59]

(2/10) Over 1/3 of the all items seasonally adjusted increase is due to used vehicles, that rose 10% MoM. Both wholesale and retail used vehicle prices continue to rise. Retail lags wholesale, so continued rising wholesales suggests there is more room to run for retail prices.

[adaltos @adaltos59]

@AvidCommentator @coloradotravis Agreed. Risk of runaway inflation is still quite low IMO. Risk of a policy mistake due to the fear of runaway inflation seems to be growing by the day.

[adaltos @adaltos59]

(10/10) Increases in used vehicle prices are driven by both strong demand and very tight supply. We know supply constraints have an expiration date once supply chains normalize. The primary question will be how much stronger the demand can become and for how long?

[adaltos @adaltos59]

(1/10) Hot inflation prints this morning with CPI excl. Food & Energy up ~3% YoY.
https://t.co/Uxfhu7R5hv

[adaltos @adaltos59]

(9/10) The supply of used vehicles is constrained by both the lack of new vehicles, fewer off-lease vehicles, lack of rental company fleets coming into the auctions. Supply of used will likely remain fairly tight until new production challenges are resolved.