• More and more markets are moving in a manner that suggests a less inflationary outcome, even as economic data continues to come in strong
• A broadly stronger Dollar, together with falling yields and a flattening US yield curve are not signs of economic strength
• Rather, they signal tightening USD liquidity and a deteriorating growth outlook
• How these markets move in the coming weeks and months will give us a better idea of how disinflationary things will get
• Stagflation is also becoming increasingly likely, especially if commodity prices stay high due to supply constraints
  • WTI will be more of an issue here than copper

Many think high oil prices = high #inflation = Fed must raise rates. Implicit is the assumption that demand is booming.

But supply cuts are a major factor here. pic.twitter.com/NMmtsy9zC4

— The Pensive Nugget (@pensivenugget) July 6, 2021