Bond market sends troubling signal on inflation that should concern investors

[Yo_Mama_Been_Loggin]

The U.S. bond market sold off on Tuesday in a manner that tends to spell fresh trouble for many stock investors.

The selloff in Treasurys sent the yield on the 30-year bond to almost 5.02% and its highest closing level since May 23. Back in May, the 30-year yield’s rise above 5% was accompanied by worries about the U.S.’s fiscal outlook. By contrast, Tuesday’s moves were largely about the outlook for inflation after June data showed consumer prices rose by the most on a monthly basis since the beginning of the year.

A 30-year Treasury yield that rises above 5% tends to be negative for stocks because of the way it impacts borrowing rates for households and businesses. The yield is used as a benchmark on everything from mortgages to corporate bonds, and also provides clues on market participants’ outlook for the economy and government debt.

Among other things, Tuesday’s rise in yields sent the message that U.S. policymakers may not be able to cut interest rates in two quarter-point increments this year, as Federal Reserve officials had signaled in June.

https://www.msn.com/en-us/money/markets/bond-market-sends-troubling-signal-on-inflation-that-should-concern-investors/ar-AA1IF9Fw

[dweller]

1. My local NBC news at noon 'appeared' to be ready to discuss this

Pointing out inflation up 2.+% and segued into tips for how to prepare for higher prices … and suggested buying used and second hand products

😐


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[Wounded Bear]

2. As long as we have a sane chair of the Fed, they won't raise rates...

while facing coming inflation brought on by stupid moves by the administration.

After Powell steps down and trump picks a toadie, Katy bar the door. Maybe the rest of the board of governors at the Fed can restrain whoever trump picks, but it's getting harder and harder to believe that the trump depression is not right around the corner.

This report about the bond market is only the most recent indicator of coming inflation, or possibly stagflation.

[lastlib]

4. The Board of Governors has seven members, IIRC

The Felon has to appoint four of them to determine its course. The FOMC, which actually sets interest rates, is composed of the seven Board Members, and Federal Reserve Bank presidents, so it would be difficult to install enough members to change the committee's stance on interest rates. The Felon is just blowing smoke up his followers' asses on this--just replacing Powell ain't gonna get him what he wants.

[lastlib]

5. Hyper-inflation, Zimbabwe-style, seems very unlikely.....

but a very high inflation rate as the country saw in the wake of the Arab oil embargo in the 70s is certainly possible. It's more likely in the unlikely event that The Felon forces Powell out, and makes significant inroads in changing the FOMC. Really, his best bet is to leave Powell in place and hold rates steady to manage the current inflation.

My 2cts.