Weekly Charts

 

Each Thursday, the MCP Research team shares two charts we are currently looking at that bring insights into the current state of the markets. This week—transitory inflation.

Have investors already given up on the reflation trade? The inflation narrative really took hold of the markets in March (it was all CNBC could talk about), but if you went long that trade then, you would have significantly underperformed. Since March, 10Y treasury bonds have rallied, and growth stocks are back in fashion. This is causing a lot of investors to scratch their heads in confusion—the chart says the 10Y is heading down, but inflationary pressures are still rising and the Fed has announced plans to taper their purchases, so why?

As the 10Y yield approaches its 200 day moving average, it will be worth watching, to see if the recent rotation back into growth has been nothing but noise, or if the markets truly believe in the notion that inflation will be transitory

 
 
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