Tag Archives: CPI - 7 posts found

Rising Inflation in China

PPI in China has swung from deflation to relatively high inflation over the last 6 months. Wholesale prices are rising fast, import prices are also rising due to the lagged effects from a weaker yuan are moving sharply higher. (CPI,…


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Higher Inflation Expectations to Favour Equities over Bonds

(from our Tactical of November 8th 2016) Bond yields have been rising in most countries, and yield curves have steepened across the developed world.  As the top chart shows, the rise in nominal yields has come from a rise in…


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Euro to Remain Better Supported

(from our Tactical of 18th October 2016) One currency that may buck the trend and remain supported against the dollar is the euro.  Although tapering from the ECB does not look imminent, core inflation may start surprising to the upside…


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Real Yields Wildly Mispriced Given Stagflation Light

The US now has the worst combination of outcomes, poor growth and rising inflation.  Bond yields are now the most negative they have been in almost forty years.  Only in the 1970s during stagflationary episodes were real yields this negative.   …


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Higher Inflation Target –> Even More Mispriced USTs

A discussion of late has been whether the Fed should raise its inflation target.  We think this would be a bad idea.  Currently, with a 2% target, the Taylor rule implies the Fed Funds rate should be closer to 2%….


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Inflation Alive and Well in the US

We have focused on the theme of the misplaced fear of deflation at Variant Perception frequently over the past 18 months.  At several points, markets and commentators seem to have become preoccupied with a belief that growth-destroying deflation was imminent….


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US Bond Market Pricing in Stagflation and not Deflation

The US CPI is currently just above target at 2.3%, and long-term market expectations of inflation measured by the US inflation swap curve remains mid-range. This is in stark contrast to all-time lows in nominal treasury yields which appear to be pricing in almost the end of the world.


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