Notice the yield on the long bond is going DOWWWWWNNN...
While the Fed continues to push the short rates up, up, UP...
While oil and other commodities are rallying again...
This combination of conditions seems terribly unnatural to me and I am at odds to explain it. The commodities market sees inflation, but the bond market isn't buying the story. Maybe the bond market thinks the commodity prices are going to choke the global economy, or that fed policy will eventually choke the commodity rally?? I dunno. But one of these indicators has got to give in to the other at some point. Greenspan's "conundrum" speech doesn't even do the situation justice. It's just plain weird.
While the Fed continues to push the short rates up, up, UP...
While oil and other commodities are rallying again...
This combination of conditions seems terribly unnatural to me and I am at odds to explain it. The commodities market sees inflation, but the bond market isn't buying the story. Maybe the bond market thinks the commodity prices are going to choke the global economy, or that fed policy will eventually choke the commodity rally?? I dunno. But one of these indicators has got to give in to the other at some point. Greenspan's "conundrum" speech doesn't even do the situation justice. It's just plain weird.