One indicator of the inflation trades may be starting to fail
With the understanding that inflation expectations continue to be in post-FOMC recovery mode and that there are few danger signs (yet) for the markets gauging by junk bonds and associated speculation, long-term Treasury yields are still taking a hit as the post-FOMC ‘buy the (taper) news in Treasury bonds’ play continues, resulting in a drop in long-term Treasury yields.
If the 30 year yield above tanks there would go the theoretical right side shoulder of the Continuum. If that goes, what happens to some of the inflation trades shown below it? While not a cause for panic, it is a question worth asking if you are not a part of the “commodity super cycle!” hype herd.
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