Well, the dollar is up, gold is down and the long bond is moving lower (rates higher). The first two items imply declining inflation, the bond pricing moving lower is indicative of higher inflation.
The implication of lower bond prices is that our lenders are requiring higher returns on their money as they believe that inflation and/or a declining dollar will reduce the value of their investment. My only question is what took them so long to figure that out. Also, this is a great lesson in markets not necessarily moving rationally, at least on the surface.
Here are some charts of various indici’s:
Gold, the Dollar Index and the Lehman 20+ year bond index
(click to enlarge)
