“The Great Inflation Debate” and other stuff

Interestingly, the day after gold traded over $1000 and the US$ index fell to a one year low, Fed Pres Evans gives a speech at 8am titled “The Great Inflation Debate.” In the inflation data we still have disinflationary trends but the question is whether the Fed has laid the groundwork for eventual inflation as its development is a process, not an event and price stability and a stable currency go hand in hand. With mortgage rates falling to the lowest level since May, the MBA said refi’s rose 22.5% and purchases were up 9.5% to the highest level since Jan. The home buying tax credit expires on Nov 30 so there is a sense of urgency to take advantage. ABC confidence fell 3 points to a 6 week low led by a 6 point drop in the Personal Finance component. The Fed’s Beige Book should reflect the Q3 GDP upturn that we are seeing but the composition of it will be a focus. The Treasury comes to market with $20b of its benchmark 10 yr notes.

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