Taper or no Taper? (October 12, 2021)
US10Y has been soaring to the upside because of investors thinking that higher inflation means higher interest rates. However, I still think that there is no recovery in the U.S. economy, especially in the labor market. High inflation is here to stay and central banks may be powerless to fight it without derailing the economic recovery.
Since the Fed is known for favoring fighting unemployment over inflation. Deciding between the lesser of two evils, what do you choose? I think most likely you choose inflation because you can't do much about it anyway.
Moreover, The Atlanta Fed decreased its expectations for Q3 #GDP from 2.3% to 1.3%. 3 months ago, its forecast for Q3 growth exceeded 7% pushing for more optimism on tapering… Economic growth is slowing rapidly while consumer prices are skyrocketing.
Additionally, the Fed is known for favoring fighting unemployment over inflation.
From a technical perspective, the price reached the beginning of the falling wedge and at the same time retested the broken trendline and didn't manage to break above it. Also, since this area is known to be the previous wave 4 zone (around the 1.7% zone), thus not breaking above it will lead to further downside for yields signaling a possibility that the Fed may be keeping rates low in order to maintain the economic recovery.
Since the Fed is known for favoring fighting unemployment over inflation. Deciding between the lesser of two evils, what do you choose? I think most likely you choose inflation because you can't do much about it anyway.
Moreover, The Atlanta Fed decreased its expectations for Q3 #GDP from 2.3% to 1.3%. 3 months ago, its forecast for Q3 growth exceeded 7% pushing for more optimism on tapering… Economic growth is slowing rapidly while consumer prices are skyrocketing.
Additionally, the Fed is known for favoring fighting unemployment over inflation.
From a technical perspective, the price reached the beginning of the falling wedge and at the same time retested the broken trendline and didn't manage to break above it. Also, since this area is known to be the previous wave 4 zone (around the 1.7% zone), thus not breaking above it will lead to further downside for yields signaling a possibility that the Fed may be keeping rates low in order to maintain the economic recovery.
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