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📑 Research Notes for 2020-12-14
This week, we look at implied inflation expectations, the rally in oil, and the rise in interest rates.
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Treasury Market Expects Higher Inflation. Will Hard Data Follow?
(The Capital Speculator)
The Treasury market’s certainly pricing in a firmer run of inflation expectations lately. At yesterday’s close (Dec. 9), the implied forecast via the yield spread on the nominal less inflation-indexed 10-year maturities rose to 1.91% — the highest since early 2019.
Irrational Exuberance Hits the Oil Market.
Covid-19 vaccines are raising hopes of a swift recovery in oil demand next year, but markets seem to have thrown caution to the wind. Brent crude hit $50 a barrel last week, its highest level since March, before the Covid-19 pandemic really began to tear a hole through people’s lives and economic lockdowns hammered oil consumption.
Interest Rates Turn "Golden."
For the first time in nearly 2 years, the yield on 10-year Treasury notes has undergone a "Golden Cross", with its 50-day moving average crossing above its 200-day average.
Curated by Joseph Lu, CFA®
Joseph has over a decade of experience as an investment professional, primarily in quantitative analysis and portfolio management roles. He is the founder and managing director of Conscious Capital Advisors and a CFA® Charterholder. The CFA charter is a globally respected, graduate-level investment credential by the CFA Institute, a global association of more than 90,000 investment professionals working in over 133 countries.
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