US Economic Boom Augurs Fear of Inflation

#inflation

Expectations of an economic boom in the US have pushed inflation expectations to their highest marks since Y 2014. Rising inflation weighs on the economy by increasing debt rates for companies and consumers.

Bond yields, meanwhile rose to their pre-VirusCasedemic highs during Q-1, with benchmark 10 yr T-Notes rising to almost 1.75%. That run up weighed on tech companies, many of which are valued more on their future earnings than current profits, and prompted investors to buy financials that benefit from higher interest rates.

"The more value-oriented, more economically-titled portfolios tended to do better in the first quarter,” said the director of mutual fund research at New York-based CFRA. “If interest rates remain range bound that bodes well for the future. But if we see rising interest rates that could slow the economy, which would benefit the larger cap strategies.”

Overall, active US stock funds returned an average of 7% through 24 March, with large cap funds returning an average of 5% while small-cap funds gained an average of 11.7%, according to Morningstar data.

Editors Note: The massive printing of money is going to lead to an economic crisis that Mr. Biden's admin is ignoring, as there is real danger is printing money, as it leads to inflation and that means higher interest rates. The government’s printing press does not create resources, real people working create resources.

Have a healthy, happy holiday weekend, Keep the Faith!