My (rough) estimate of the deflationary impact of a complete magic-money cutoff is around 8%. Of course, the Fed will eventually “print” (after a long enough wait to punish Trump – because the Fed is comprised of Blue Hats, and Trump = Hitler), but will it be enough? And if the magic money machine scope is disclosed, Fed printing might actually make the situation worse due to the confidence hit post-magic-money disclosure. “Oh, they’re using a FED magic money machine. Bail out of the buck faster!”
Consumer Economy
Producer Prices (PPIACO); -0.37% m/m
CPI All Urban (CPIAUCSL); -0.05% m/m
Both Producer Prices and CPI fell this month. But nobody noticed – nobody cared. Trump-Flation has become Trump-Crash. “Look! TrumpCrash-Squirrel!” Dropping oil prices tends to result in a falling PPI, and boy, have those oil prices dropped.
Overall, this looks deflationary.
Beneath the Skin of CPI Inflation: Surging Prices of Food, Housing, Medical Care Meet Plunging Prices of Gasoline & Travel Services [Apr 10] (source – wolfstreet);
My favorites from Wolf’s table:
+ Vaxxident Insurance -0.8% m/m
+ Vaxxident Repair +0.8% m/m
+ Vaxxident Medical Care/Insurance +0.5% m/m
Credit & Rates
Fed Balance Sheet (WALCL), 6.727T +4.0B, (+0.06% w/w), (prior -0.25% w/w)
30 Year Mortgage Rate (MORTGAGE30US); 6.62% -2 bp
10 Year Treasury (DGS10); 4.51% +50 bp
20 Year Fund (TLT); -6.42%
AAA-10 Year Spread (AAA10Y); 1.26% +2 bp
The Fed did mostly nothing, and bank credit expanded modestly (4.68% annualized). That feels neutral, rather than deflationary.
The increase in the 10-year yield was the big news; the 50 basis point move (resulting in a loss of 6.42% for TLT) was massive. Looking back through history (since 1962), this weekly move was in the top 20. Almost all of the other weekly 50+ bp increases were back during Jimmy Carter; 1979-1981.
I was concerned that this massive increase in Treasury yields reflected a panic out of US government assets – the dreaded confidence collapse in the US government. To confirm, I looked up the AAA/10Year spread, expecting to see bad news.
by larrythelogger 
