Questions for economists
(Not intended as investment advice)
1) If there is fear of inflation, why are long-term treasury rates lower than say even the 90′s?
2) If the equity and commodity market was inflated because of Quantative Easing, now that fed has announced the decision, more or less, to stop it what is supporting the bubble.
3) With the big run-up in oil and commodity and inflation creeping up world-wide leading to monetary tigthening, why is the CPI still so low.
On 2, here is a theses which needs to be looked into in historical context. Low interest rates leads to asset inflation. But the money was mostly coming in from professional investors. Of course, the retail investor was shell-shocked and stood on the sidelines. Now because of all this buzz, money is beginning to flow in mutual funds from retail investors even as the professional support starts backing off. If you are fed you are hoping that equities will get support long enough to spur investment and jump start the economy. But what about commodities? Of course, precious metal are following their own logic which has to be some combination of money chasing returns away from fixed income and inflation fears.
