The big tail of the current 30-year reopening in the United States is a further sign that once the Fed stops buying, there will be no more supply on fixed income, especially with the inflation where it is.
Tomorrow we will have a new look at the start of US prices and there are new reasons for concern today after President Biden said the November report would not reflect recent price declines, in particular energy.
This comment makes people think he saw the numbers. I don’t think that’s the case as the protocol is to provide sensitive data to the White House in the late afternoon before it is released. Instead, it’s likely a reaction to the consensus of economists, which is up 6.8% from 6.2% in October.
If I’m wrong, he could signal that the number will be above 7%, which is a painful threshold that would also bolster expectations of a faster Fed cut announcement next Wednesday.
A key chart that I continue to watch is the 10 year yields chart. I highlighted this earlier in the week as they challenged the uptrend. It’s held up, but we’re not in the middle of the range as the market tries to determine if it’s more concerned about the omicron or inflation.