In this article I look at the longer-term prospects for inflation in the US. The lockdown decline and subsequent recovery in GDP growth, together with the concomitant fall and rise in prices is already evident. Meanwhile, the forward-looking stock market continues to travel hopefully, anticipating the end of restrictions and a return to the new normal. The bond market, by contrast, may be starting to express fears that the largest peacetime stimulus in history might have longer-term inflationary consequences.
Since making all-time low yields in August 2020, US 10yr Treasury
Bond yields have risen steadily, but, as the chart below reveals, only
back to the depressed levels of H2, 2019 and mid-2016. Is this a
post-lockdown correction or an inflection point, or is it too soon to
say?........To Read More...
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