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May 16, 2005

Bonds strong going into PPI/CPI data, Mon., May 16, 2005, 12:31 PM

Bond prices for U.S. Treasury's, Muni's and Corporate's are all higher today. Apparently, bond traders are comfortable with the "U.S. inflation is well contained" pitch by the Fed.


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I suppose we'll have to see tomorrow and Wednesday what the inflation figures show. The bond market seems to saying, "no inflation, but watch out for possible deflation".

Longer-term I believe the likelihood is probably 65:35 in favor of deflation, but I believe that over the next several months the equity market will contain inflation fears and that the USD and U.S. bonds will weaken.

I want to see the PPI/CPI data in the next 44 hours before changing any strategies or tactics.

Posted by Posted by Bill Cara on May 16, 2005 12:32:04 PM | Category: Bonds , Economics