Later today I'll post my first extended rebuttal to the inflation argument, specifically on the concept of debt monetization and foreign participation in the U.S. Treasury market. There's still time to write me your thoughts (accruedint AT gmail.com)!
Meanwhile, I've posted a poll on where you come out on the inflation/deflation case. See the right hand side of the main page.
Also, as a bit of a prequel, I thought I'd post a link to my primary deflation argument from a few weeks ago. Feel free to post your own rebuttals here, or if you make a rebuttal on another blog, post a link in the comments.
Tuesday, June 02, 2009
SMACKDOWN WEEK: Prequel
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2 comments:
Watch EUR/USD.
The rally has been going on for quite a while but 1.48-1.49 seems to be the upper limit.
COTs (Commitment of Traders) futures data from last week shows the specs blasting ahead w/large net short dollar positions - giving plenty of scope for short-covering.
3 Key US announcements this week: 1) Geithner in Beijing; 2) Obama in Riyadh; and 3) Bernanke in DC
All 3 are likely to verbally pump the dollar. (Although the Chinese laughed at Geithner)
This could give rise to your bond rally.
While certainly no pro like you and while I guess it is really more supportive of your deflation thesis, could all these rising yields simply be the result of a very large dollar carry trade which might unwind viciously when currency traders start worrying it has gone too far?
Currency traders must certainly be able to make some very big waves in all the other markets (bonds, commodities, equities, etc...) when they get a bee in their bonnet, no?
But again, I profess no special knowledge as your other readers have.
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