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It has strengthened a bit since I took this screenshot, but I wanted to point out that bonds, by way of the TLT fund, have closed their price gap and look poised to rally (as counter-intuitive as that may seem in a world of ostensibly rising interest rates):
While most of us are adjusting to the current economic climate, a Federal government saving initiative is growing traction in recent days. To our surprise, the United States Series I Bonds are considered a major leap forward for inflation-secured investments. While the government is throwing its weight behind it, analysts have suggested those looking to save up for their pensions do so too.
Retirees and young investors are now considering the remarkable returns they can receive from Series I Bonds. With 7.12% interest, these bonds mature for up to 30 years, and can be easily redeemed after the first 12 months. An attractive option many are now considering after the recent jump of inflation.
Yet, so many of us have disregarded these bonds, and of the $21 trillion invested in federal bonds, only $46 billion are made up of Series I Bonds.
(more…)The two important headlines I saw today both came from Our Dear Leader Powell. In his testimony today, Chairman Powell declared that “It is time to retire the word transitory regarding inflation”, and “the threat of persistently higher inflation has grown.” Finally, he added that the Fed “can consider wrapping up the taper a few months sooner.”
The fact that inflation is here is no shock to the average American, but to hear it come out of the Fed Chairman’s mouth was a bit shocking today. Also, the idea of speeding up the taper has not been priced into markets. I believe soon we’ll be hearing Chairman Powell begin to broach the topic of raising interest rates sooner than expected as well.
So, what does this mean for markets going forward, and are we at a key turning point? If the Fed is now moving to a stance of acknowledging a persistent inflation problem, logic would dictate that a policy response would follow.
(more…)You know what to do.
Below is TLT, which continues to crumble away as the world realizes lending money to a failing nation isn’t a great idea. Get ready for higher interest rates, higher inflation, and a plunging Fed reputation.
