Inflation looming

Posted: October 31, 2016 in Uncategorized

The US bond yields are rising.

Saudi and China are dumping US Treasuries at record pace (part of the yield back up story as the more sale the higher the yield).

China is dropping them to stimulate recovery and protect the Yuan (now Chinese Treasury holding are at 2012 level) and Saudi to finance its two wars (Syria and Yemen).

This conspire to accelerate inflation as all the banks (also in Australia) gets their liquidity from the US (so they have to pay more…so they will increase the interest rates charged).

Now also the Chinese prices at factory gates are increasing and China has been the big deflation exporter in the world for decades now.

The inflation shock can come faster and harder than expected.

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