via KEVIN
Via several Michael Howell videos I explained that the money supply is the main driver of inflation and asset markets – so its a lot more complicated than “inflation is up, so rates must go up – central banks will try and reduce the money supply by making loans more expensive”.The money supply is not soley controlled by interest rates.
Inflation, as we saw last week from the US, was a lot higher than expected and the US 10yr yield gapped lower and stayed down, Trump’s attack on Iran has caused a massive reversal, but as I have been pointing out on here for over a year, the bond market for some reason is ignoring current and future inflation, and is seeing much lower rates from the Fed as the primary driver of yields – or a massive recession – but since that would result in another massive wave of QE and subsequent inflation it can’t be that either can it?
So to me, inflation is going to continue rising with central banks driving it higher and higher, the spike in oil prices is excellent news for them, the next figures that show inflation is going even higher will be blamed on the price of oil.
Nobody is going to stop them, historically the bond market did, but now they are happy to keep losing money by buying guaranteed losing bonds at higher and higher prices, when – not if – the central banks have to go full on QE to prevent the asset bubbles from imploding they have that covered too, they will just buy ALL government debt issued, no need for a bond market then is there? Governments can spend as much as they like.£5 for an egg anyone?