Below is a weekly continuation chart of 10-Year Notes. Today we have 10-Year Note yields at 1.745%, a 14-month high. So, as it stands, we’re back to pre-pandemic levels.
There’s been much debate about whether or not the reflation efforts would create inflation or if we’re just seeing a “normalization” in rates. We’ll see now, at these levels, if Treasuries pause and consolidate or continue to move lower as yields continue to climb towards 2.00%; and quite possibly even higher.
My personal opinion is that we’re headed towards runaway inflation. I’ve talked about money supply: we have record levels of cash out there waiting for something to do. With another FOMC meeting behind us, it’s clear that the Fed is stubbornly sticking to their easy money policies for the foreseeable future. They’re in a bad trade that keeps getting worse and now they don’t know how to get out! Don’t trust that the Fed will be able to control inflation once they let it out of the bag.
We’re at the beginning of a secular bull market in commodities. Watch the 10-Year Note Futures. Gold has finally bottomed out, platinum is trending higher, and silver will break out above $30.00 this year.
We’re about to enter the volatile weather markets in grains and they’re already in a bull market. It’ll take near-ideal weather conditions to rebuild already very tight stocks. Livestock prices have been climbing and energy markets have been moving higher, as well.
While the equity markets continue to set new record highs, confident that the Fed is there for support, it would make sense to me that big investors once again look at the futures markets to hedge your portfolios against adverse downside moves.
Weekly Continuation Chart of 10-Year Notes
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