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Is inflation looming?

Old 10-10-2021, 08:07 AM
  #31  
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Old 10-11-2021, 10:13 AM
  #32  
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…bond market vigilantes.


https://thehill.com/opinion/finance/...ket-vigilantes

An excerpt:

With growing signs that rising inflation is anything but transitory, as the Federal Reserve keeps assuring us, there are ominous signs that the bond market vigilantes might once again be saddling up. Indeed, over the last couple of months, 10-year U.S. Treasury bond yields have risen sharply to 1.6 percent, or to more than double their level last year. The continuation of the bond market sell-off could pose a serious challenge to the U.S. economic recovery by triggering the bursting of today’s “everything” asset price and credit market bubble.

The latest run-up in long-term bond yields suggest that the markets are not nearly as sanguine as is the Fed about the inflation outlook. Whereas the Fed believes that inflation will soon return to its 2 percent inflation target and that there will be no need to raise interest rates until 2023 to keep inflation in check, the markets seem to be fretting that the Fed could soon fall behind the inflation curve.

In seeming to be concerned about the inflation outlook, the markets seem to have in mind the many troubling tell-tale signs of future inflation. It is not only that world food prices have increased by over 30 percent. Or that ahead of the Northern Hemisphere winter natural gas prices are skyrocketing and international oil prices have more than doubled over the past year to around $80 a barrel. It is also that a policy-induced rapid increase in domestic aggregate demand is running into global supply chain problems and domestic labor shortages that could last longer than U.S. economic policymakers expect.

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Old 10-12-2021, 12:40 PM
  #33  
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Old 10-13-2021, 06:19 AM
  #34  
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Social Security COLA largest in decades as inflation jumps


By RICARDO ALONSO-ZALDIVAR and CHRISTOPHER RUGABERan hour ago
WASHINGTON (AP) — Millions of retirees on Social Security will get a 5.9% boost in benefits for 2022. The biggest cost-of-living adjustment in 39 years follows a burst in inflation as the economy struggles to shake off the drag of the coronavirus pandemic.

from USA Today.
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Old 10-13-2021, 02:54 PM
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https://apnews.com/article/business-...b2d2e25dff1983
an excerpt:

NEW YORK (AP) — Get ready to pay sharply higher bills for heating this winter, along with seemingly everything else.

With prices surging worldwide for heating oil, natural gas and other fuels, the U.S. government said Wednesday it expects households to see their heating bills jump as much as 54% compared to last winter.

Nearly half the homes in the U.S. use natural gas for heat, and they could pay an average $746 this winter, 30% more than a year ago. Those in the Midwest could get particularly pinched, with bills up an estimated 49%, and this could be the most expensive winter for natural-gas heated homes since 2008-2009.

The second-most used heating source for homes is electricity, making up 41% of the country, and those households could see a more modest 6% increase to $1,268. Homes using heating oil, which make up 4% of the country, could see a 43% increase — more than $500 — to $1,734. The sharpest increases are likely for homes that use propane, which account for 5% of U.S. households.
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Old 10-15-2021, 06:55 AM
  #36  
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I think we may get to see for ourselves what airline business models can best handle stagflation.
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Old 10-15-2021, 12:59 PM
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Old 10-18-2021, 08:07 AM
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Old 10-18-2021, 01:54 PM
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For two generations, inflation has been relatively low and controlled. Not zero, but okay. Wait til the politicians forget the past, as they have, and we see inflation at 7%-10%, interest rates above 12%, mortgage rates at 12%, housing prices stuck because few can qualify for mortgages, government interest costs north of $1.5 trillion (today it’s at $500 billion), every bond auction a nail-biting exercise for Treasury. Then, we’ll see the effects of these insane policies.
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Old 10-18-2021, 08:10 PM
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Originally Posted by galaxy flyer View Post
For two generations, inflation has been relatively low and controlled. Not zero, but okay. Wait til the politicians forget the past, as they have, and we see inflation at 7%-10%, interest rates above 12%, mortgage rates at 12%, housing prices stuck because few can qualify for mortgages, government interest costs north of $1.5 trillion (today it’s at $500 billion), every bond auction a nail-biting exercise for Treasury. Then, we’ll see the effects of these insane policies.
More to the point for the airlines, several airlines have big tranches of bond issuances coming due in the next year to two. These bonds were originally sold at reasonably low coupon (~3_4%). But the airlines haven’t made the sort f profits due to COVID that would allow them to pay off these bonds at maturity which means they’ll have to be paid off by issuing new bonds based upon the same (aircraft) collateral. Except the aircraft themselves are no longer new and not worth as much as collateral and the bond coupon rates (and hence the debt service) will be considerably higher.

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