The Lead-Lag Report: Forced Reflation
SuperBen and the League of Extraordinary Bankers are forcing reflation upon us, and for risk assets, that's bullish.
Treasury Inflation Protected Securities (TIP) – Whoa
Comments: The TIP/IEF price ratio is one way of seeing if inflation expectations are rising or falling within the bond market. When the ratio is trending higher, it means bets are occurring on rising prices ahead. TIPS went utterly wild following the Fed's QE3 announcement, as inflation expectations surged. Holding this ratio level will be very important in the coming weeks ahead for risk assets.
LAGGARDS: BEAR TRADE CONTINUES TO BREAK DOWN
Health Care (XLV) – Re-sync?
Comments: Health care has re-synced to the bear trade, weakening in sympathy with utilities (XLU), and consumer staples (XLP) as the bear trade fades. Further weakness appears likely given that dividends seem to be getting more and more out of favor on inflationary fears.
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