Trading Inflation

High inflation has been a hot topic in 2021, but US treasury production has actually declined in recent weeks, suggesting that there may be more to life than meets the eye.

This story continues in June 2021 and references may have been written, but it remains useful and appealing to traders.

Like a classic horror film, inflation in 2021 is expected to kill Bugman in 2021.

S&P 500 15% year-to-day, that massacre has not yet arrived.

As the global economy recovers from the Covenant-19 epidemic in 2021, many researchers predict that inflation will rise sharply. And despite the skepticism of the global economy in recent months, some key interest rates (ie, inflation) have been adjusted — particularly for US treasury products.

Treasury products represent the US government’s debt recovery and are often used as a “canary in coal mines” for the underlying economy.

For example, the US Treasury note traded more than 3 percent at the end of 2018, before falling sharply to 0.318% in March 2020, when the financial markets fell sharply.

Since then, the stock has staged a spectacular rally, bringing its 10-year treasury back to 1.78% this March. As a result of this activity, many market participants feared that the 10-year treasury could grow by 2.50% in the summer.

U.S. 10-Year Treasury Product Jump

But summer has officially arrived, and treasury products are really moving in the opposite direction.

As of June 14, the U.S. 10-year Treasury note traded around 1.50% — a 14-week high of 14 percent. After all, this is a less complete point than Bugman.

As the world economy recovers and large-scale immunization programs are under way, one wonders why production is declining rather than taking drastic action.

That is not an easy question to answer, but primarily, the decline in productivity is perhaps a reflection of the strength of the post-Kovid economy, or at least to the extent that it is expected.

Vaccination rates are high in the United States (> 50% of the population) but the fact that the rest of the world is lagging behind may be one of the reasons why expectations are high. By this time, it is estimated that about 20% of the total population have received at least one approved CV-19 vaccine.

While that may not be easy, the reality is that many countries, including the United States, need to be vaccinated before many countries can open their borders to foreigners. And although tourism is not the most important industry on our planet, it remains an important indicator of global prosperity.

The graphics below show how much of the world will not be vaccinated until 2022.

Vaccination time

Reflecting on these dire vaccines, China has recently announced plans to open its borders to foreign tourists. That is despite the fact that China has vaccinated more than 900 million people within its borders.

Considering that COVID-19 originated in China, they hoped that the reopening of the country’s borders would be an important step in marking the “end” of the epidemic. This is especially important given China’s important manufacturing role in the world economy.

Based on factual information, many other countries in Asia are likely to be closed to foreigners in the near future. Vietnam, a major winner in the recent US-China trade war, will probably not open its borders to foreigners until 2022.

And importantly, because international travel restrictions often affect business people, tourists are not the only ones affected. The fact is that fewer business travelers are, in fact, the same as small businesses.

In addition to the devastation caused by the epidemic, in 2019, Hong Kong was the most visited city on the planet with over 27 million unique residents. By 2020, that number had dropped to 3.5 million — the lowest annual total.

Apart from the travel indicator, there is evidence from other markets that the expected revival of the CVD-19 economy is likely to be volatile. Wood prices have fallen 22 percent since May 10. Housing will start strong in the US by 2020, and similarly the recent decline – from March to April, fell by 13.4 percent.

And just like the other day, consumer data collected in May indicates that retail sales in the United States declined last month. Retail sales were similar in China in May, when the situation was tense.

These median economic indicators may help to understand why the US Federal Reserve is consistent (not to mention confidence) as the “transient” of 2021 inflation.

Small pins

Significantly, the US Central Bank amendment came on June 16 after a two-day policy meeting of the country’s top bankers. A few months ago, the leaders of the federation reiterated their desire to keep interest rates in the United States (almost zero) unchanged until 2023.

Investors and traders will no doubt be watching closely this week to see if these sentiments have changed.

Serge Anderson is a fake name. He is an experienced retailer of equity products and has managed flexible portfolio-based portfolio as a former Proprietary Support employee. He is not an employee of Luckbox, tastytrade or any related company.

Originally published by Luboxes magazine. Sign up for free at getluckbox.com/dailyfx


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