Yield Curve Updated

With nominal long-term yields recovering as expected, the Yield Curve is joining in by resuming its inflationary steepener.

yield curve

yield curve

Below is the big picture, which I never get tired of looking at. The inflationary steepening is now well along but probably has significantly higher to go before it either gets out of control to the upside * due to inflation or subject to a massive macro volatility, morphs to a deflationary steepener as it did in 2008.

The lower panels show the stock market sucking up that inflationary reflation policy, gold sitting on its ample butt consolidating a bullish move and commodities still rallying from the depths. All in response to the cyclical inflation they are trying to cook up at this time.

yield curve

* Operation Twist was cooked up by Bernanke in 2011 with the express intent to “sanitize” [the Fed used that very word] inflation out of the macro picture… and it friggin’ worked as intended as the subsequent flattening brought a Goldilocks boom with it. The 2008 volatility was much different. That was market forces finally unleashed.

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