Inflation

Volatility in the U.S. Treasury market continues to pull on municipal bond valuations, despite little trading volume.

CB President Christine Lagarde said Wednesday that inflation “is largely attributable to the reopening of the economy.”

Large new issues from California, New York utilities and airport deals were repriced to lower yields and remained the focus for the municipal market, again ignoring a swing by U.S. Treasuries.

Refinitiv Lipper reported $1.1 billion of inflows into municipal bond mutual funds, with high-yield falling to $144 million. Even with the lower reported inflows, funds still raked in record billions so far in 2021.

COVID has impacted so many sectors of life over the past two years. Its presence has spiked a sudden increase in inflation, and whether it is a blip or a long-term trend is still unknown.

Treasury Secretary Janet Yellen said that by the end of this year, monthly price changes will be running at a level consistent with the Federal Reserve’s target, even if year-over-year numbers continue to show uncomfortably high inflation.

Joe Kalish, chief global macro strategist at Ned Davis Research, discusses his thoughts on when the Federal Reserve will announce it will cut back on its asset purchases, the possibility of Chair Jerome Powell’s re-nomination and what to expect from the Jackson Hole summit. Gary Siegel hosts (27 minutes)

Fundamentally, much of the price inflation we’ve experienced over the past year can be attributed to the trillions of dollars of new money pumped into the economy that’s been looking for a home ever since.

What bond-market guru Mohammed El-Erian said Friday was enough to make bond investors listen like they’re in an old E.F. Hutton commercial.

Increasing attention to whether inflation is a problem for the U.S. economy and financial markets isn’t resolved easily by looking at the most recent economic and financial market data.