Will Inflation Burst The Everything Bubble?

March 14, 2018

The economic data is now beginning to reveal what the bond market has been screaming for weeks: namely that INFLATION. HAS. ARRIVED.

In the last 24 hours we’ve seen:

Core inflation rose 2.2% year over year for the month of February.

Media one-year inflation expectations rose to 2.83% from 2.71%

Wage data rose at an annualized pace of 3% over the last three months.

The markets have already taken note, with inflationary assets exploding out of downtrends and entering raging bull markets.

Copper is roaring higher.

Steel is doing the same.

Even Coal, which everyone thought was dead, is up 300% from its lows.

Unfortunately, this trend also spells DOOM for the Bond Bubble.

Why?

Bond yields trade based on inflation. So if inflation is rising, bond yields will do the same.

When bond yields rise, bond prices fall.

When bond price fall, the Bond Bubble begins to burst.

On that note, bond yields are spiking around to globe to accommodate higher inflation. Already we are seeing yields on US Treasuries, German Bunds, and even Japanese Government Bonds spike higher to test if not BREAK their long-term downward trendlines.

This is a truly global problem for global Central Banks which are all WAY behind the curve. And this is going to present investors with one of the great money-making opportunities of 2018 if they're positioned correctly.

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Graham Summers is Chief Market Strategist for Phoenix Capital Research, an independent investment research firm based in the Washington DC-metro area with clients in 56 countries around the world.

Graham’s clients include over 20,000 retail investors as well as strategists at some of the largest financial institutions in the world (Morgan Stanley, Merrill Lynch, Royal Bank of Scotland, UBS, and Raymond James to name a few). His views on business and investing has been featured in RollingStone magazine, The New York Post, CNN Money, Crain’s New York Business, the National Review, Thomson Reuters, the Glenn Beck Show and more.

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