Treasuries fell while the dollar advanced in a reversal of Tuesday’s trading as the markets weighed the prospect of rising inflation against the political uncertainty of a Trump presidency. Equites fluctuated amid corporate results.
Data indicating a fifth consecutive monthly advance in the cost of living bolstered arguments inflation is taking hold in the US. Similar statistics indicated a like environment in both Britain and the Eurozone.
Will inflation continue to accelerate, the inverse of the previous five years when pricing pressures were all but nonexistent? Such would have a large ramification on the sovereign debt markets and any other income alternative investments. Perhaps the only certainty to write that once inflationary pressures begin to accelerate at a rate faster than expected, to tamp such pressures is equivalent to putting toothpaste back into the proverbial tube.
The Fed Beige Book or the statistical reference utilized at the upcoming Fed meeting suggested wage inflation at either end of the spectrum is accelerating, the later the result of the lack of qualified workers and the former because of political pressures.
Will cost push or wage inflation become an issue as it did in the late 1970s, the last time there was a dearth of qualified workers, the LPR was around today’s level, and demand pull inflation accelerated to levels not experienced since the end of price controls at the conclusion of WWII?
Treasuries were crushed yesterday on the data with yields on the thirty year over 3% and 10 year in excess of 2.42%. Equities were quiet.
What will happen today? Will today be regarded as the day the megacapitalized growth issues began their descent into life support because of the formal collapse of globalism? Many of the largest growth firms have over 70%of their revenues from trade.
Last night the foreign markets were down. London was down 0.56%, Paris down 0.06%, and Frankfurt down 0.08%. China was down 0.38%, Japan up 0.94% and Hang Sang down 0.21%.
The Dow should open quietly lower. The 10-year is off 1/32 to yield 2.44%.
