‘Self-Defeating’ Rate Hikes Could Endanger ‘Agnostic’ Stocks

‘Self-Defeating’ Rate Hikes Could Endanger ‘Agnostic’ Stocks

There's no longer any point in using words like "disconnected" to describe the relationship between nominal long-end yields and the incoming inflation data. We're now so far afield that such adjectives are empty. That's one message from the latest by Deutsche Bank's Aleksandar Kocic. "The departure of rates from inflation has become so extreme that it is meaningless to talk about dislocations anymore," he said. "There is little doubt that this is an entirely different game now." The figure (b
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6 thoughts on “‘Self-Defeating’ Rate Hikes Could Endanger ‘Agnostic’ Stocks

  1. Local hardware store is unable to stock some things that they would certainly raise the price on. There are bottlenecks. By next season stuff could be pouring all over shelves. Nobody knows. Also still a lot of lost income out there.

  2. If that first chart was a graph of the 10Y UST vs. trailing 2 year CPI (thereby neutralizing pandemic dynamics), I suspect the latest data points wouldn’t be so far out of whack vs. the data set (but probably still well below the trend line).

  3. This Economy has been tinkered and tampered with so much it is starting to remind me of a Chainsaw I once had that had a tendency to run backwards when first started.. It was really caused by an engineering “improvement” by a well meaning wizard engineer. Scared the heck out of me upon occasion .. This is a great post (by the way) and Kocic (and H…) have a unique talent to try to put some perspective to this

  4. when someone can explain how one measures inflation when the market basket of goods and services is unstable I will give them a medal. What market basket weight would you put on airfares? cruises on cruise ships? peloton bikes? covid masks? cars? suburban owner occupied rents? the list can go on…. translation as einstein put it…. and this is a paraphrase…. some of the most trivial things can be measured exactly and quantified, some of the most important things cannot be measured. how do you measure labor market friction? it is anyone’s guess…. no childcare from school, hesitancy to work in customer facing service jobs, extended unemployment, early retirement, changing tastes regarding work from home….lets face it, this is not a time to listen to quants shall we. you can throw most of the analysis in the garbage right now. no disrespect, but we are currently in a situation where event the best analysis is speculative and guess work…..

    1. The Einstein wisdom is interesting. If we are honest we know that nothing about the future is knowable and as you point out, much about the present falls in the same category.

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