Editor's Note: This comes from a research note Hedgeye CEO Keith McCullough sent to subscribers Friday. If you're serious about stepping up your market game we encourage you to take a look at our offerings.
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While the macro narrative on why bond yields rallied to lower-long-term highs (again) remains malleable, the data is not.
When strategists tell you “inflation is breaking out – so bond yields are going higher,” send them these 3 charts. To be clear, bottoms are processes, not points. And all we’re seeing is a reflation of one mother of a #deflation risk.
If the Fed makes a mistake and raises rates (Dollar Up, Commodities Smoked), they’ll perpetuate #deflation and a corporate profit slow-down in #LateCycle sectors that have already lost pricing power.
- 1st chart = Headline and Core YoY
- 2nd chart = Goods vs Services, YoY
- 3rd Chart = Energy – MoM & YoY
Click to enlarge