Below are some of the most interesting articles, quotes and charts I came across this week. Click here to subscribe to our free weekly newsletter and get this post delivered to your inbox each Saturday morning.
What if the recent trend of disinflation is nothing more than an illusion?
— Jesse Felder (@jessefelder) July 31, 2023
That may, in fact, be the message in the bond market…
The US Treasury selloff has been driven by long-dated notes, not those most sensitive to Fed policy. This suggests two things: traders expect inflation to stay higher for longer and they question whether the Fed is truly going to raise rates high enough to achieve 2% inflation pic.twitter.com/el0ugW2yRf
— Lisa Abramowicz (@lisaabramowicz1) August 3, 2023
…which raises the possibility of a de-anchoring of inflation expectations and an inflation spiral.
— Jesse Felder (@jessefelder) August 3, 2023
Renewed strength in the commodities markets would only compound the problem.
The resumption of the commodity supercycle is close.
Our portfolio positioning update elaborates on this tantalizing insight👇
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We entered an intermission for the supercycle in May 2022 when cyclical conditions turned negative, offsetting the positive structural… pic.twitter.com/kVRcT3jfJR
— Variant Perception (@VrntPerception) August 3, 2023
Meanwhile, equities are acting as if the inflation dragon has been slain and interest rates are headed back to zero.
'The Magnificent Seven boast an average P/E ratio of 43, almost double the average ratio of 25 for the rest of the field. The spread has rarely been this wide. What's more, the P/E ratio for the rest is among the highest readings on record.' https://t.co/lHWf825d07
— Jesse Felder (@jessefelder) August 2, 2023
Thanks for reading and have a great weekend!