No Surprises Today
Chairman Powell is consistent, he is willing to keep expanding the bubble into the explosion.
Embedded inflation is lurking and consumers are getting scared. Market interest rates will move to the front in this scene as the meaningless Fed Funds rate is only a lagging indictor, not a leading indicator.
Here is the chart updated through this moment, that illustrates points we have been making for the past few years. What is important is the 10 to 2 year yield curve which is probably the easiest and best way to see what is happening. The slowing of the reopening which started in April of this year brought this yield curve down, but now you are seeing signs of it bottoming and getting ready to rise. With a little scan here of the 10-2 YC, one can see important points that show the August 2019 and August 2020 bottoms that line up with August 2021 bottom.