CCPA Executive Director Bruce Campbell coordinated the following letter, published at rabble.ca, from a number of progressive economists (mostly academic and private sector, not from the trade union sector) about the growing
risk of deflation in general and the federal government's attack on auto workers in particular.
«As growth slows and
risk of deflation heightens, we reiterate that China needs to cut reserve requirement ratio (RRR) by another 50bps in Q4,» ANZ economists Li - gang Liu and Louis Lam, said in a note.
The five - year futures markets are already pricing in a
higher risk of deflation in Germany than in Japan, due to recent yen dynamics.
If you're really a long - term investor (10 + years), the historical ERP has been so high and current bond yields are so low that it takes a rather irrational level of risk aversion to own bonds, unless you think the ERP is wrong and / or there's a
substantial risk of deflation.
(FYI: Some folks think this is why there is little to zero
risk of deflation for the foreseeable future in the US.
The sharp jump in debt yields in tandem was mirrored by a rally in commodity prices, which suggests that investors are becoming less worried about
the risks of deflation.
«As the market prices in higher short - term yields and lower long - term yields, it is really making a bet that the Fed, by tapering our punchbowl drip, is increasing
the risk of deflation,» says Zervos.
But the unexpected sweep of Thursday's announced steps was also seen as a sign that the E.C.B. was more worried than analysts thought about
the risk of deflation.
In an interview with Bloomberg, Soros claimed that China's slowdown is combining with lower oil prices and competitive currency devaluations to increase
the risk of deflation around the world.
By itself, QE is unlikely to spur European growth, but it should go a long way in mitigating
the risk of deflation and supporting European equities, particularly in peripheral countries, where stocks are already up sharply year - to - date.
ii) Suppose that the risk of stagflation replaces
the risk of deflation.
Central bankers worry about inflation falling too low because it raises
the risk of deflation, or generally falling prices, a phenomenon that is difficult to combat through monetary policy.
The risk of deflation alone has proved problematic, and has occurred several times at inflatable dome facilities, particularly due to snow loads.
While «The Peril» focuses mostly on the economy and
the risks of deflation, there are also important insights for investors to take away from the discussion.
At present, the near - term risk of inflation appears substantially higher than
the risk of deflation.
You would have a portfolio with an average maturity of five years that would balance / diversify
the risks of deflation (when reinvestment risk shows up) and inflation (when term risk rears its ugly head).
Potential catalysts include heightened geopolitical risks, monetary policy that underprices risk and protracted low inflation, and
the risk of deflation.
I see the risk of inflation must greater right now than
the risk of deflation, hence I am in the process of strategically «leveraging up» on my real estate holdings.