Issue 8 – The Fed and Inflation are Still the Big Story on Wall Street

Investors were kept busy all week with a docket of economic prints, especially the BEA January report of inflation, even though it came out late in the week. The idea that the core personal consumption expenditure (PCE) price index would reveal just how sticky inflation really is, spooked the markets into believing that the Fed is nowhere near done. Historically, the 30-year Treasury yield (4.00%) trades on average roughly 3.00% above PCE inflation – This +3.00% spread is true specifically when the prospects for higher inflation are shared unanimously, and monetary policy seems oblivious to a prospective decrease in employment.


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By Hubert Marleau

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By Hubert Marleau

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