Inflation? I don’t think so… and neither do bonds

This inflation phase is done, so says the bond market

It is as I’ve been saying for at least a half a year now; inflation is done. For this cycle at least.

The 2 year Treasury bond yield says the inflation phase is done (owning short-term Treasury bonds is not and has not been a bad idea).

2 year treasury bond yield

The 10 year Treasury bond yield says inflation is done as it slips the daily SMA 200 again.

10 year treasury bond yield

The 30 year Treasury bond yield says so as well as it ticks below the SMA 200.

30 year treasury bond yield

As to this last one, a drop through 3.4% would probably bring on a deflation scare of some kind. Then the question would be what will the Fed do? Or what will the Fed not be able to do or choose not to do? Eh? The next inflation cycle is likely a long way out. Like, a long way.

30 year treasury bond yield, monthly chart

For “best of breed” top down analysis of all major markets, subscribe to NFTRH Premium, which includes an in-depth weekly market report, detailed market updates and NFTRH+ dynamic updates and chart/trade setup ideas. Subscribe by Credit Card or PayPal using a link on the right sidebar (if using a mobile device you may need to scroll down) or see all options and more info. Keep up to date with actionable public content at by using the email form on the right sidebar. Follow via Twitter@NFTRHgt.



This Post Has 5 Comments

  1. Cloistered Puck

    But but … how can this be with silver breaking out?? I understand bonds are “smarter” than silver but can they both be right? Are we talking the monetary aspects of silver dominating then? Thank Gary!

    1. Gary

      I think silver has acted more like a precious metal than a commodity since 2020, much like gold. That said, when the real deflationary pressure exerts I don’t expect silver to continue stronger than gold. Instead, the opposite.

    2. Gary

      Indeed, gold may also get dinged. But it if liquidity is draining from markets it would go up in RELATION to most other assets.

  2. Bart

    The eternal discussion. Will it all end in deflation or (hyper)inflation? The Roman empire fell when they started to water down the money supply. Gold coins with copper and silver coins with zinc.

    1. Gary

      Exactly. One will bring on the other. Right now I am looking at a deflationary episode as a lever. That is what it has been all along the orderly continuum. The problem now is that broken continuum. Does it mean the next inflation will be more intense or does it mean that there is a lot of room for bubble implosion before they reach for that lever again?

Comments are closed.