Bond yields are sending an economic warning as this past week 10-year Treasury yields dropped back to 1.3%. With the simultaneous surge in the dollar, there is rising evidence the economic “reflation” trade is getting unwound.
“Warnings From Behind The Curtain” almost sounds like the title of a good “Cold War” fiction novel. However, this time, the story is of warnings for investors not often discussed by the mainstream media.
Currently, depending on whether you are “bullish” or “bearish,” there is much angst over the prospect of higher inflation. If you are bullish, higher inflation is a reflection of surging economic growth. If you are bearish, higher inflation leads to rising costs and higher rates. However, we need a better definition of what inflation is.