The Continuum Has Limited Inflation Trades for Decades

After an interaction with an NFTRH subscriber (the ones with whom I have corresponded are so smart it can be intimidating sometimes) who debates the view of a pervasively inflationary future (which is not my view), I would like to remind readers that what is my oldest and maybe favorite tool, the 30 year yield Continuum, indicates that a rise to the limiter (100 month EMA) could very well represent a ‘SELL’ on any inflation trades that may whip up in the coming months.

Indeed, the Continuum is showing the opposite (no inflation expectations), which is part of the reason I think deflation is played out on the near-term.  We used this chart last week in NFTRH 397 for the very purpose of having this reminder, given my voluminous talking about inflation lately.  From #397…

tyx

Finally, amid all this talk of potential inflation, a reminder that we have been on a disinflationary continuum, with each inflationary phase merely representing a ping of the ‘limiter’ AKA the monthly EMA 100. If a rise in long-term yields begins the limiter would likely mark a ‘sell’ in stocks, commodities and precious metal speculations down the road, unless it is truly going to be ‘different this time’ as opposed to the last 30 years.

 

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