“If the markets don’t infer from this that it’ll be high for longer, we’ll have to use our rate instruments and hike to get where we want to go.”
A black swan of sorts no one was ready for: Negative interest rates turned positive, and all heck broke loose in the property development sector.
More QT and fewer rate hikes?
The QT show started less than a year ago. German home prices -11%, ECB assets -19%.
But motor fuel prices plunge, and inflation in durable goods and food cools – same as everywhere.
“The drivers of inflation are changing…. Domestic price pressures, including from rising wages and robust profit margins,” are increasingly important: ECB
All eyes are now on underlying inflation. Forget the collapsing energy prices that pushed down overall CPI.
As China unloaded Treasury securities and Japan propped up the yen, other countries loaded up.
An important thing to keep our eyes on these days.
In other words, after a spike, the dollar dropped back to the higher end of the normal 20-year range. But the yen is a sloppy mess.