Reversals, Inflation And Scares Play On The Markets – Investing.com

Reversals, Inflation And Scares Play On The Markets – Investing.com

The stumbled in its upward run again. The has risen. So too has the put/call ratio. But all this is little more than white noise as nothing has dramatically changed in the markets. We're chopping along without advance clues either way – unless you look at inflation expectations and Treasury yields.

The Treasury market's lull only means that inflation trades have been dialled back somewhat. As I wrote on May 27, so far it's only precious metals that are relentlessly calling the Fed's bluff – by rising almost in a straight line. And just when you thought the transitory or permanently elevated inflation debate couldn't get any more ridiculous, New York Fed President William Dudley weighs in, saying U.S. inflation is transitory but could become more persistent. It's almost as miraculous as being half pregnant.

Seriously, it's a testament to the Fed communications success that the transitory story has been swallowed hook, line and sinker to this degree. We're getting a temporary reprieve but the cost-push inflation isn't going away.