A “Minsky Moment” Powder Keg

• A “Minsky Moment” Powder Keg
  by Benjamin Picton, Senior Macro Strategist at Rabobank, via https://www.zerohedge.com/
  Two Steps Forward, One Step Back
  The University of Michigan consumer survey released last Friday held good news for the economy that may be bad news for markets. Measures of consumer sentiment, current conditions and future expectations all surged. However, 1-year inflation expectations defied analyst predictions of a fall to rise by one tick on the month to 3.4%, while 5-10 year inflation expectations also nudged higher to 3.1%. The strong reading appears in contrast to the CPI inflation report released last week, which showed core inflation running two ticks lower than expected at 4.8% year-on-year and also puts further pressure on widespread expectations of impending recession.
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  10-year Treasury yields duly rose by almost 7bps to 3.83%, but remain well off the 4.08% highest close for the year that was recorded just ten days ago. Equity markets seem to be unsure what to make of it all. The NASDAQ closed down 0.18% while the lower beta Dow Jones index recorded a gain of 0.33%. Separating the signal from the noise here is difficult, but the overall impression is that the inflation battle has not yet been convincingly won.
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