The bond market isn't pricing in high inflation

[Tomconroy]

I can't post from it but the Dealbook newsletter from the NYT today points out the Treasury bond market isn't pricing in for sustained inflation. Treasuries across the board are pretty steady way below that probably transitory 6 percent number from the other day. The bond market is often pretty sharp. It can tell you things about the future.

[mahatmakanejeeves]

1. Does the NYT Business section have its own Twitter account?

One separate from the main NYT Twitter account? If so, there might be something there.

[Tomconroy]

2. Don't know. Don't really do twitter.

[mahatmakanejeeves]

4. I checked. It does.

https://twitter.com/nytimesbusiness

[JohnSJ]

3. Treasury debt yields went higher and the 30 year bond auction was weak. In addition,

the real yields on treasury inflation protected securities actually fell to record lows when the CPI data was released. It then stabilized somewhat, but no one should have the illusion that the bond market isn’t concerned by the inflation numbers, they are.

The question is are the inflation numbers due to shortages because of the mishandling of the pandemic, and trump’s trade wars? If that is the case, those issues can be resolved, and prices should stabilize and come down.

[Klaralven]

5. So long as the Federal Reserve continues to buy large amounts, the bond price is too high

I'd expect the bond prices to fall as the Fed starts tapering its bond buying. It has been buying $80 Billion / month of Treasuries.

Fed to start tapering bond purchases later this month as it begins pulling back on pandemic aid

Tapering of bond purchases will start “later this month,” the policymaking Federal Open Market Committee said in its post-meeting statement. The process will see reductions of $15 billion each month -- $10 billion in Treasurys and $5 billion in mortgage-backed securities – from the current $120 billion a month that the Fed is buying.

https://www.cnbc.com/2021/11/03/fed-decision-taper-timetable-as-it-starts-pulling-back-on-pandemic-era-economic-aid-.html