Under the Surface, These Days

Inflation expectations started to tick up globally, indicated by the continuous inflows into some Treasury Inflation Protected Securities Bond ETF (TIP), which is quite reasonable since all magic players cheat and Central Banks are no exception. The economists have been talking about the helicopter money for years without clearly knowing how the inflation exactly works in the system, and suddenly the deflationary UK got a YOY CPI jump of 1.0% following the continuous slide in sterling since the Brexit. At the same time sovereign bond yields are heading higher and higher, to prove the irrationality of the irrational negative interest rates.

REITs fell a lot from their August peak, possibly driven by the anticipation of a December interest rate hike from the FED. S&P 500 is not doing better, with a longest losing streak in 5 years being recorded, so far. The panic is looming as investor found themselves preoccupied by one question in a sudden: What if Donald Trump got elected as the US president?

Oil prices are still struggling. The perspective of the ongoing OPEC deal became gloomy since no one want to fulfil others’ wishes, and the agreement is being reached that there won’t be any substantial rebounding for the crude prices until some of those forces get screwed, which is not impossible thanks to the increasing fragility in their inner system.

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