FATT News and Press, Fat Tail Risk ETF From 08/13/21

The BLS reports producer prices that are still rising at substantial rates. The PPI representing the final demand for finished goods was up 9.35% YoY in July, slightly faster than the 9.19% posted in June. The latest a new thirteen-year high just about equal to August 2008. It isn...

The Fed is promising to be too easy for too long, and that means the current inflation surge is unlikely to prove temporary. That, in turn, means that interest rates are very likely to rise above expectations. Fiscal policy is dangerously "stimulative." No need for Congress to do anyt...

The annual rate of inflation has seemingly peaked, but the details show a broadening out of price pressures. This indicates inflation is likely to be more persistent and pervasive than predicted by the Federal Reserve. With consumer inflation expectations also on the rise, the cas...

According to the BLS and its latest CPI estimates for the month of July 2021, consumer prices are still well higher than they had been during July 2020, but the rate of change seems to have changed (second derivative). The latest estimate decelerated, potentially suggesting the arriva...

We may well have seen the trough in both USD and EUR rates this summer, but we expect USD rates will rise much faster from here. With Fed tapering coming into view, the divergence with ECB QE policy will become more obvious. There is divergence on the US front end too, as bills re...

Hawkish soundbites and positive economic news dominate for the US, despite global growth concerns. Officials talking about tapering within a few months should help focus minds at the long end of the curve, despite a supportive technical backdrop for bonds. A glut of cash remains i...

The continued flattening move in the rate market suggests no major change in market dynamics as the case for Fed tightening becomes increasingly convincing. More upbeat economic data this week, and hawkish soundbites, would only displace bond demand towards longer maturities. We m...

The New Normal looks a lot like the Old Normal in that it is unknown and ever changing. All we can do is observe the present with clear eyes. For now, the economic outlook is still pretty good. It isn’t the boom everyone was expecting a few months ago, and it probably wonȁ...

Up until the last decade, negative interest rates were the stuff of abstract theory. Today, the volume of fixed-income securities trading with yields below zero runs to $16.5 trillion, having grown steadily over the past two months with the renewed rally in global bond prices. Expecta...

In the beginning of August, the 10-year U.S. Treasury yield had dropped to 1.18%, down significantly from a post-pandemic peak of 1.75% in March. A confluence of technical and fundamental factors contributed to the drop in yields, too. Investors observing the trends toward “...