Overtime
Inflation
Good morning,
Today’s report is all about inflation.
Hopefully, we covered the basics and what investors should be doing in their portfolios in yesterday’s Playbook. But Overtime is our chance to go deeper, and this has the potential to be the most important story outside of AI this year.
We’ll break down:
Why oil matters for inflation and what the technicals say
Other inflationary forces
Market-based expectations
The Fed
Interest rates technicals across the curve
And of course, we’ll end by reiterating how investors should be positioning within their fixed income allocations.
Let’s get into it!
Let’s start with the obvious cause: Oil
Oil has and always will matter for inflation
As expected, the oil futures curve has continued to catch higher
Not only this, but the backwardation has been getting more extreme recently. This is a sign of increasing pressure on prices for delivery right now, and we can see that momentum building in spot prices:
