Devil in the Details of Inflation Report
Headline inflation seemed tame, but some of the underlying data, including rent and services inflation, are truly worrisome.
Markets were generally stronger this week, though we are at a loss to explain why. Almost every major equity market was up about 3%. Commodities were just about flat, and oil seems to have stabilized, at least for this week, with more talk of oil production curbs by major producing nations. We aren't great believers in this actually happening. We do believe that, based on production costs and demand that continues to grow, oil prices may not have a lot further to fall. However, we don't hold ourselves out as experts in this area.
We would guess that talks about more monetary easing combined with stabilization in oil prices and acceptable, if not thrilling, economic news kept markets happy. Modestly lower bond yields this week suggest that more QE is anticipated. But maybe the sellers just got tired, too. No one knows.