The Economic Cycle Research Institute, a New York-based independent forecasting group known as ECRI, said inflation pressure is at a 47-year low. (More about ECRI)
ECRI's US Future Inflation Gauge (US-FIG), an index designed to anticipate cyclical turning points in inflation, plunged to a 47-year low.
The USFIG dropped to 88.5 (1992=100) in November from 92.7 in October, while its smoothed annualized growth rate dived to -35.3% from -31.8%. The gauge was pulled down in November by disinflationary moves in all available components.
"With the USFIG nose-diving to its lowest reading since 1961, U.S. inflation pressures have collapsed" said Lakshman Achuthan, managing director at ECRI.
The very low US-FIG means means the Federal Reserve can keep the Fed Funds rate low or cut it more since inflation pressures are still in a cyclical decline.
Oil Prices Per Barrel courtesy of Stockcharts.com
With gasoline selling for under $2.00 per gallon, even in Taxifornia, this should act as a stimulus package to help consumers.The US Fig is at a 47-year low. Curious enough, my father bought his first home to raise our family in 1960 about 48-years ago, using a 4.00% CAL-VET loan. (He served in the US Navy during the Korean War.) Now there is talk the Fed will buy home loans to target a 4.5%, 30-year fixed mortgage rate. The low interest rates of the 1960s were followed by the high inflation of the 1970s and 1980s. Will history repeat itself?
More Information:
- More about ECRI US-FIG Growth Rate
- US Treasury Rates at a Glance
- World Stock Markets at a Glance
- Libor Rates at a Glance
"Highest CD Rate Survey + Current US Treasury Rates"
Easier to read table here
| Term | Date | Highest Rate (APY) | Where? (Click link for Full Rate Sheets) |
| Daily Savings | 12/04/08 | 2.60% | Vanguard Prime Money Market Fund |
| Tax Exempt | 12/04/08 | 1.13% | Vanguard Tax Exempt Money Market Fund |
| Online Savings | 12/04/08 | 3.25% | High Performance Money Fund @ Wachovia Bank |
| 3-Month Treasury | 12/04/08 | 0.01% | US Treasury Rates at a glance |
| 6 Months | 12/04/08 | 4.32% | State Bank of India & 3.76% at Ascencia Bank |
| 6-Month Treasury | 12/04/08 | 0.29% | US Treasury Rates at a glance |
| 7 Months | 12/04/08 | 2.60% | Wachovia Bank |
| 1 Year | 12/04/08 | 4.68% | State Bank of India & 4.10 @ Umbrella Bank |
| 1 Year Treasury | 12/04/08 | 0.64% | US Treasury Rates at a glance |
| 18 Months | 4.40% | UmbrellaBank & 4.30% @ Capital One | |
| 2 Years | 4.51% | 1st Source Bank & 4.45% @ GMAC Bank | |
| 1 Year Treasury | 12/04/08 | 0.90% | US Treasury Rates at a glance |
| 3 Years | 4.80% | 1st Source Bank & 4.75% @ Intervest National Bank | |
| 3-Yr Treasury | 12/04/08 | 1.09% | US Treasury Rates at a glance |
| 4 Years | 5.05% | Intervest National Bank & 4.96% @ Capital One | |
| 5 Years | 5.25% | Intervest National Bank & 5.20% @ Capital One | |
| 5 Yr Treasury | 12/04/08 | 1.61% | US Treasury Rates at a glance |
| 7 Years | 5.50% | Capital One & 5.00% @ PenFed CU | |
| 10 Yr Treasury | 12/04/08 | 2.63% | US Treasury Rates at a glance |
| 7 Years | 12/04/08 | 5.31% | Intervest National Bank |
| 30 Yr Treasury | 12/04/08 | 3.13% | US Treasury Rates at a glance |
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kirklindstrom.com
does that make TIPS a poor choice at this time?
ReplyDeleteRon, my advice is in my newsletter. If my newsletter recommendations are unclear, then I answer subscribers questions about my advice via email, not free, public forums. Here my interest is presenting and discussing data, not dispensing advice.
ReplyDeleteWith that said, I believe Inflation peaked in July at 5.6% and should head lower in the months ahead as the price of oil has plunged OVER 67% from a peak of $147.90 in July to $41.66 now. Here is a chart of Vanguard’s TIPS fund where you can see it was between $12 and $13 in July and is now about $11.50, down between 5 and 10%.... a lot for a TIPS fund.
The price of TIPS, like the price of the stock market, should reflect all CURRENT information as well as consensus belief about the future. I like to take a contrarian approach, FWIW. Remember that contrarians buy when their price levels are reached but it doesn’t mean they/we buy at bottoms so patience and fortitude are required to get the good long-term results we show.
Kirk, you have been labeled a malicious site by Facebook. What have you done! For shame! And congratulations. By the way, the video on the Fuhrer was so funny I almost died.
ReplyDelete