Skip to comments.U.S. inflation rise boosts dollar, Fed could be more hawkish
Posted on 06/17/2014 11:53:27 AM PDT by ConservingFreedom
The dollar edged up and U.S. Treasuries prices slipped on Tuesday as rising U.S. inflation drove speculation that the Federal Reserve, which is meeting this week, may raise interest rates sooner than global investors have been expecting.
Wall Street stocks rose modestly, reversing earlier declines, though investors kept a watch on the turmoil in Iraq as the Federal Reserve began its two-day policy meeting. [...]
(Excerpt) Read more at reuters.com ...
The dollar didn’t “edge up.” It lost some value, so higher numbers were required to obtain the same value.
We are not idiots.
OK,I’ll bite. With inflation causing the fed to quit QE and begin hiking short term rates the market went up. Why?
The economy is getting stronger. Q2 growth may come in at 3%.
While the coasts are not feeling it — the midsection of the country is enjoying high agriculture prices (for export) and an energy revolution that literally reshaping capital flows around the world—and strengthening the dollar.
Median income is still down. Obamacare is reducing disposable income. Unemployment is still very high as is government dependence and corporate taxes. Where does the pricing power come from when meat, potatoes and energy are all inflating as we speak?
If I told you that the USA was producing half a trillion dollars worth of gold every year—on its way to a trillion dollars worth of gold every year in two years or so. ....
the picuture might become clearer.
The effect of oil production is much the same
Also the europeans are adopting negative interest rates as a way to avoid deflation. This tends to favor the USA dollar and stock market.
I think the japanese are doing the same thing.
This is happening even as US fiscal and monetary policy are getting tighter.
If GDP grows at 3% in Q2 that will mean GDP for the first half of the year will be less than 1% after Q1 is revised down again. This will probably result in 2014 GDP growth of under 2.5%. Hardly boom times.