Interesting. Looking for DEFLATION. This ought to throw a nice "curve-ball" to all of the the "Helicopter" Ben Bashers who think that inflation is out of control.
Ben Bashers are correct. So are those who are looking for deflation. A declining housing market is deflationary. To pay down debt without printing the money to do it is also deflationary. That banks are more restrictive about lending now is deflationary. But Ben is likely to mash the money-pump gas even harder to try to head off deflation. It's sort of like having you head in the oven and your feet in the freezer... "on balance", you're comfortable. Personally, I think we get BIG inflation... in spite of the deflationary forces.
This is NOT deflation, or the beginnings of such... It's just credit DECELERATION.. Now, it's unprecendented credit deceleration (down almost 75% in 18 months) which makes it look to some people like deflation, but it's not.. Inflation will be and remain out of control until we get a Volker type Fed chairman who will sacrifice the politics and the Wall Streeters for the benefit of the American people...
Some neat graphs there. A whole different perspective. Some look to be a bit lagging though. Explains the GSE issue though. The equity markets need to discount that still.
If inflation was out of control, wouldn't long bonds be down in the dumpster and the ten year would be yielding 12, 13 or 16% like in the late 70s as wage inflation was rampant and fueling price increases across the board? Unit labor cost increases were insane (+10%) in 1979 while productivity growth was negative. All references comparing today to what Volcker was dealing with are baseless IMO. P.S. Yes yes I know it's all a big conspiracy as the Fed, the Chinese and Wall Street are manipulating the 10y & 30y bonds to display artificially low yields... YAWN!
Good point. But remember it only takes a couple of weeks of selling bonds to get to that yield range.