Last week Jerome Powell was nominated as the next Federal Reserve chairman. In addition to this key announcement other market-moving data, including the employment report, tax bill and treasury refunding, failed to create a significant move in the stock or bond markets.
Over the past four months, I have closely watched the gradual increase of commodity prices. Crude oil has risen from its June 2017 lows of $43/barrel to $56/barrel on a weakening dollar, declining inventories and stronger global growth. The increase in oil prices, in addition to some of the major metals markets like gold and copper, may signal some building inflationary pressure. Offsetting these factors is the flattening yield curve which appears to indicate concerns about future growth. Over the next few months one of these two indicators needs to change directions. Either indicator could have ramifications for bond and stock prices during 2018.
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