NoMoreKickingCans;308673 wrote:Today the US PPI came in well below expectation indicating inflation falling away.
Seems an odd reaction today. You would have thought this would bring higher gilt/treasury prices based on rate cuts becoming more likely. And stock prices potentially up - certainly for infra, property, and high yield. But no bonds almost unmoved and stocks strongly down. Why ?
Only idea seems to be that central banks are ignoring the data and are not going to cut even though they may already be too late. Therefore market expects recession and hard landing coming hence market falls ?
Or is the price of Labour’s victory going to be ‘Truss like’ interest rates required to be able to sell UK debt ?
I guess rates will stay higher, longer to make inflation undershoot and regain the 'average' long term rate. Particularly in the UK.
The BoE target is the same afaik. 2% long term. So maybe we should expet 1% inflation for a couple of years?
Or perhaps the central banks simply wan tto inflate away the debts they have run up...
But with the ECB cutting rates this week, maybe it's time for me to start buying some bonds.. hmm..