What’s With Inflation Signals?

Tell me, who is wrong on inflation, Commodities or Treasury bonds?  They will not remain under pressure together, as they have been this week, for long.  This is the kind of distortion that gets built into markets when Fed speakers inhale microphones, when a new president and the hype that hinges on his every word addresses congress and I guess, when the Dow keeps taking out numbers in 1000 point increments as if it’s routine.

Anyway, the Commodity ETF is rolling over.

dbc

The long-term Treasury bond fund, which I still hold, has gotten hammered on Trumpmanic reflation/inflation expectations and attendant FOMC rate hike hysterics.

tlt

TIP-IEF, an inflation expectations gauge, is ambling along putting the Fed on notice that it could well have hiked in February, yet is going sideways now.  Where’s the inflation hysteria in light of all the infrastructure build-out and reflation talk?  Pausing maybe?  Or preparing to roll over?

tip-ief ratio

The Silver-Gold ratio made a big, bearish looking candle today but is still in an uptrend for 2017.  But that candle sure ain’t pretty.  Commodities seem to think SGR will break down.  That event would be in line with deflationary, not inflationary signaling and could bring some real diverse asset market pain to boot.

silver-gold ratio

Gold has been out performing Commodities for all of 2017 and that argues against the inflationary view.  I mean, gold’s gotten hammered and this ratio had every right to break down, but did not.

gld-dbc ratio

Commodity Currencies are now getting hammered as well.

cdw

xad

The above are the two lone currencies that we have been noting USD to look bearish in relation to.  Uncle Buck’s been bullish vs. everybody else.  Below is the daily ‘pairs’ chart we review each week in NFTRH.  I’d been anticipating the USD index’s potential to hit the SMA 200 (solid blue line) as long as it kept under the SMA 50.  This week it popped the SMA 50.

As for the pairs, Uncle Buck is bullish vs. everybody except neutral/bullish vs. Canada and neutral/bearish vs. Australia, which has its own economic growth situation going on down there.  But again, per the chart above, XAD index did just take a pretty good hit today.

currency pairs

I am not going to tie this up into any sort of conclusion because I am just trying to put an incomplete puzzle together, but I don’t see an inflation problem brewing; other than maybe, in the stock market.  But that is where the inflation went during the monetary policy shenanigans of the last 8 years as well… well really, during the policy shenanigans beginning with Operation Twist after silver and commodities blew out in 2011.  You would think it’s getting a little saturated.

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