Inflation Series: Part 4 The bond market says the low inflation days are over
For most of the 1980-2020 period, interest rates have fallen. Sure, there were the occasional pullbacks in this trend, but overall rates have fallen and inflation has been quiet. No longer. Inflation is much higher than desired and the Fed has been dragging its feet to fix the problem.
Naturally, the bond market gets a vote and the current vote is DOWN. Bond investors are voting with their feet and refusing to buy bonds unless the yield is higher. This is inflationary because it makes debt more expensive forcing everyone's cost of business to go higher. This is true for government as well as private organizations.
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Robert Lloyd, CFA®
Chief Investment Officer
Lloyds Intrepid Wealth Management
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