So we got really hot consumer price indexes this morning–darned near double the consensus estimates.
Really with the CPI at .9% and even the core CPI at .9% you have to assume that the rate of inflation is more than transitory–and even if these huge increases are transitory I would assume that inflation in the months later this year and into 2022 the CPI will be running double the Federal Reserves 2% target.
I initially though that both stocks and bonds might react more sharply than they have today–the 10 year treasury jumped a couple basis points to as high as 1.42% and then promptly started lower and now at 1.36%. I guess hot inflation is simply a yawner to bond buyers with no where else to go to earn a couple penny’s.
As I mentioned a week or so ago until we see true reductions in bond buying by the Fed I don’t think rates are going higher–inflation or not–the demand is simply overwhelming.
So far, for now, we continue to play the same investing games–have a base position of 60-70% invested and playing the dividend capture and ‘flipping’ new issue game with free cash. That has worked spectacularly so far–I can’t even whine about the low coupons because if I can squeeze a 1 or 2% gain out of new issues what do I have to complain about? Even this month, which is likely to show more modest gains, it still looks like I can get a 1/2 to 3/4% increase in assets–whats to complain about?