Fed

Where Are The Bond Vigilantes?

Jul 31, 2022 1 min read

The wage-price-rent spiral continues to spiral. Yet, the Bond Vigilantes, who were very vigilant at the start of the year, seem to be taking a siesta now. The US Treasury bond yield peaked this year (so far) at 3.49% on June 14, falling to 2.67% on Friday. That’s surprising given that inflation remains so high. But we aren’t surprised. As we’ve pointed out before, the

Ed Yardeni

Tomorrow's ECI Could Be Bad News

Jul 28, 2022 1 min read paid

Q2's Employment Cost Index (ECI) comes out tomorrow morning. In his press conference yesterday, Fed Chair Jerome Powell assessed inflationary pressures in the labor market. He said: "There's some evidence that wages, if you look at average hourly earnings [AHE], they appear to be moderating. Not so yet from the other wage measures. And we'll be getting the employment compensation index measurement I

Ed Yardeni

Jamie's Hurricane

Jul 14, 2022 1 min read

The stock market is down this morning on worse-than-expected PPI inflation news, heightening fears of more aggressive Fed tightening and a recession. The yield curve spread between the 2-year and 10-year Treasuries is solidly inverted at -24bps. In addition, JP Morgan Chase reported that Q2 profits slumped as the bank built reserves for bad loans by $428 million and "temporarily" suspended share buybacks. The bank's CEO

Ed Yardeni

The Rent Is Too D@mn High!

Jul 13, 2022 1 min read

The Fed's ultra-easy monetary policies, in response to the pandemic, caused home prices to soar, and now rents are soaring. Over the 24 months through May, the median single-family home price is up a whopping 44.5%. This year's jump in mortgage rates only exacerbated the affordability problem facing first-time would-be homebuyers. As a result, many of them have no choice but to rent. Today'

Ed Yardeni

Protracted Inflation

Jun 10, 2022 2 min read

Inflation is no longer transitory or persistent. It is protracted. The headline and core CPI inflation rates have yet to peak because rapidly rising energy prices continue to put upward pressure on the headline rate directly and on the core rate indirectly by boosting energy-related costs like transportation. The headline and core rates for May were 8.6% y/y and 6.0% y/y. Here are a few quick

Ed Yardeni

More Central Bank Tightening

Jun 9, 2022 1 min read paid

Don't fight the central banks when they are fighting inflation. Stock prices dropped today on news that the European Central Bank will end quantitative easing on July 1, then raise interest rates by 25bps on July 21. It will then hike again on September 8. At -0.5%, the ECB's deposit rate has been in negative territory since 2014. Unlike the Fed, the ECB remains committed

Ed Yardeni

Quantitative Tightening Begins

Jun 5, 2022 1 min read paid

In recent conversations with our accounts, we have been hearing more concern about the Fed’s second round of quantitative tightening (QT2), which started this month. QT1, which lasted from October 1, 2017 to July 31, 2019, pared the Fed’s balance sheet by $675 billion. Under QT2, the Fed will reduce its balance sheet by running off maturing securities. From June through August, that will involve dropping its holdings

Ed Yardeni

Market Is Up Despite Hawkish Powell Interview

May 13, 2022 2 min read paid

Can the stock market finally overcome bad news? Imagine if Fed Chair Jerome Powell pivots further to the hawkish, dark side and says that he cannot guarantee that the Fed’s monetary tightening won’t cause a recession.

Ed Yardeni

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