May

19

A friend writes me and asks, "when will bonds start to act based on inflation expectations?" about this Bloomberg article "Euro-Area Bonds Climb as Coeure Says ECB to Frontload Purchases".

I don't know if it was a rhetorical question or not. The answer has to be bundled in with the seeming utter absence of labor market take-up occurring, and so fueling a general pricing competition for that (most vocal) factor of production.

The other three factors of production ebb and flow as to demand, but usually have a less general, and more of a localized 'spot market' effect, and so do not trigger off inflation expectation reactions.


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