The last time 10 year TIPS derived breakeven inflation was this low in the autumn of 2010, lumber was around $200/ft. The break in inflation expectations since last August suggests lower lumber prices are ahead.
As we noted earlier this week, banks have significantly underperformed to start the year.
While the collapse in the price of oil has grabbed the headlines, the weakness in the price of copper continues to pique our attention.
As has seemingly been the case all year (or maybe even the past four years), we had a mixed bag of economic releases today in the United States. On the positive side, we had the Chicago Fed National Activity Index post the highest monthly number since December 2006.
About a month ago, we noted that the spread between high yield bonds and treasuries was not confirming the all-time high in the S&P 500. Since that time, we have had a slight turnover in the equity market but an even larger move in junk bonds.