Evidence of Inflation Piles Up, But Treasuries Remain Sub 3.00%

More and more data indicate an economy at full employment with price increases at all levels of the economy. Producer prices saw their biggest annual increase in over 6 years today as prices climbed 0.3% last month with a 3.4% annual increase. And the NY Fed’s recently “UIG” index (Underlying Inflation Gauge which takes into account non-price data) is at 3.27%. But the 10 year Treasury yield remains stuck at sub 3.00% as markets are fearful of the consequences of tariffs and potential trade wars (less investment by companies and a slowing economy). But what if the economy actually shrugs off the tariffs and they just become another ingredient for inflation? That result may unleash pent up yield spiking. Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners