4 ms·

I hear you, but it's still interesting to think that high inflation expectations means both bonds and stocks down, but much higher inflation expectations means

I hear you, but it's still interesting to think that high inflation expectations means both bonds and stocks down, but much higher inflation expectations means stocks crash and therefore bonds is safe so they go up :-) Put differently, I could also argue that bonds up is irrational given higher inflation expectations and this move up will be short lived. Time to short bonds ;-) Will check out older NFP, thanks. > Tiny bit of data? I phrased it all wrong. What I wanted to convey is a lot of data points slightly pointing in one direction, none of which move anything individually, but at some point people realize that everything in pointing in a downwards direction, and get scared. Anyway, thanks for the chat.

rmrm 9y ago
Taking that line of thought further, that means if bonds and stocks are both down, then cash is a good place to be...when inflation is up? Investing is hard.
- fwdpropaganda 9y ago
  That's right, because cash is money now, bonds is money later. If inflation is high I'd rather have $100 now than $100 later. Of course, real decisions are made on figures. The actual way of making this decision would be to compare the bond yield with the expected inflation. If expected inflation is higher than the bonds yields I'm going to sell my bonds for cash and so will a lot of people, so the bonds price will drop and the yields will raise until a point where they're attractive again. But yes, it is hard.
  - rmrm 9y ago
    Projecting bonds being down/increasing yields isnt surprising in any way in inflationary environment. The harder thing to get around is stocks, which should outperform cash in an inflationary environment. To me it just shows that there are many dependencies, and it is not always simple to project an outcome or response for a given class to an event.
- marcosdumay 9y ago
  There are gold, FOREX, and commodities. Also, there's a huge difference between high inflation and increasing inflation.

rmrm 9y ago

Taking that line of thought further, that means if bonds and stocks are both down, then cash is a good place to be...when inflation is up? Investing is hard.

fwdpropaganda 9y ago
That's right, because cash is money now, bonds is money later. If inflation is high I'd rather have $100 now than $100 later. Of course, real decisions are made on figures. The actual way of making this decision would be to compare the bond yield with the expected inflation. If expected inflation is higher than the bonds yields I'm going to sell my bonds for cash and so will a lot of people, so the bonds price will drop and the yields will raise until a point where they're attractive again. But yes, it is hard.
- rmrm 9y ago
  Projecting bonds being down/increasing yields isnt surprising in any way in inflationary environment. The harder thing to get around is stocks, which should outperform cash in an inflationary environment. To me it just shows that there are many dependencies, and it is not always simple to project an outcome or response for a given class to an event.
marcosdumay 9y ago
There are gold, FOREX, and commodities. Also, there's a huge difference between high inflation and increasing inflation.