Industrial production was unchanged in February, the Federal Reserve reports. That’s bad. But the year-over-year pace for industrial production rose slightly—that’s good.
Daily Archives: March 16, 2012
The New Abnormal: An Update
The market’s inflation expectations and the outlook for growth remain tightly bound. The new abnormal, in other words, rolls on. Implied inflation, based on the yield spread between the nominal and inflation-indexed 10-year Treasuries, continues to rise, right along with the stock market’s climb. This positive correlation dance confounds some pundits, although some simply ignore it. Recognized or not, this relationship endures, and it’s important to understand why.