The bond vigilantes are MIA, observes Ronald McKinnon, a professor at Stanford. This is unusual, he advises. “In past decades, tense political disputes over actual or projected fiscal deficits induced sharp increases in interest rates—particularly on long-term bonds.” But as anyone who watches the Treasury market these days knows, rates have been falling, and for longer than many veteran market pundits and traders expected. To put it simply, these are extraordinary times… still. On that point, at least, there’s no debate.
Daily Archives: September 30, 2011
The Slow Grind
The recent downshift in economic activity is grinding down consumer spending and income, according to this morning’s update from the Bureau of Economic Analysis. Disposable personal income slipped marginally in August vs. the previous month—the first decline in 11 months. After adjusting for inflation, however, DPI was down a considerable 0.3%, the second real monthly drop in a row. Personal consumption expenditures fared better, rising 0.2% in nominal terms, but that was a sharply slower rate from the July bounce and on an inflation-adjusted basis PCE was flat last month.