Awaiting inflation? The bond market will tell you (TLT)
"Inflation is always and everywhere a monetary phenomen", MIlton Friedman said in 1975.
Inflation is the long-bond investor's worst enemy because the principal of the bond is fixed, causing investors to demand higher yields (higher coupon payments) when inflation is high.
If inflation is coming, long-dated bond yields will RISE, which is the same to say that long-dated bond prices will FALL.
Status quo: Long-dated bond yields have been falling persitanctly (prices have been bid up), watch the TLT.
If inflation is a monetary phenomen, QE and low rates do a very poor job creating it, watch the RINF.
The following is something you will not read on mainstreem media:
QE and low rates are NOT stimulus. Low rates signals TIGHT monetary conditions.
Why? The bond market is talling you that.
Don't listen to J. Powell or the mainstream media.
The bond market has the best track-record of them all, and will tell you when inflation is coming, i.e. when monetary conditions are loose.
Inflation is the long-bond investor's worst enemy because the principal of the bond is fixed, causing investors to demand higher yields (higher coupon payments) when inflation is high.
If inflation is coming, long-dated bond yields will RISE, which is the same to say that long-dated bond prices will FALL.
Status quo: Long-dated bond yields have been falling persitanctly (prices have been bid up), watch the TLT.
If inflation is a monetary phenomen, QE and low rates do a very poor job creating it, watch the RINF.
The following is something you will not read on mainstreem media:
QE and low rates are NOT stimulus. Low rates signals TIGHT monetary conditions.
Why? The bond market is talling you that.
Don't listen to J. Powell or the mainstream media.
The bond market has the best track-record of them all, and will tell you when inflation is coming, i.e. when monetary conditions are loose.
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