Bond Outlook October 17th

Whether the USA and other countries are heading for inflation or deflation is far from obvious. Consider both sides of the argument to review likely Fed rate moves.

Bond Outlook [by bridport & cie, October 17^th 2007]

Is inflation or deflation around the corner? Neither markets nor commentators (including ourselves) can pretend to know, so let us consider both sides of the argument:

Inflation is coming, especially in the USA: oil prices are reaching new heights, as are food costs as crops are switched to “biofuel” production. The dollar is falling as foreigners reduce their holdings of assets in USD and the Americans themselves invest abroad.