Finally getting over Inflation AND More...

1. UST 10 yr has almost hit the pre pandemic levels of 166 bps. Tapering effect can clearly be seen in the long term treasuries. This is good news for the banks, as they typically borrow short term and lend long term. While the short term has held itself downward due to the trading activity by Fed and its policy.

2. Energy prices in Europe are leading to stagflation fears. We need policy work on two fronts: First weather Eurozone can agree a deal with Russia on Nord stream pipeline 2 and second is whether OPEC plus will plan to pump in more oil In its next meeting on Nov 4.

3. Meanwhile it is interesting to see that the Bloomberg Commodity index has risen by the same measure as the best performing equity index in the world, the National Stock Exchange of India.

4. We have also seen massive rise in wages in the US, specially in the lower brackets and fresher scale, and this where the propensity to consume Is high, and thus the economist fears that this could spark the so-called wage price spiral. Young professionals have added stockpiles in savings over the pandemic and now there is revenge spending.

5. Meanwhile PBOC in China has asked the banks to start lending actively as the housing market is cooling and this could be bad for the mortgage owners.

6. India's reality sector is outperforming any other sector from any other country, and this means either we are too bullish on the consumption and investment cycle in India, or the castle will soon shatter to dust when the Fed starts tapering and rates rise.

7. The labour-work mismatch hasn’t been so great ever and the divergence cant yet be seen to settle. Can there be a better time for the machines to take over and we might see the so-called “robopocalypse''. Job opening in the manufacturing sector is at decade high, and this will soon be filled by machines and automated programs.

8. Asset managers are wary of the equity market rally and consider that policy makers might have misread the price surge. This could potentially limit their current path to start tapering. Though they say that the current inflation WAs nowhere close to the 1970 stagflation scenario as this time demand is pretty robust and economic activity looks to bounce back from December lows.

9. An interesting figure is the continuous outperformance of DMs against Ems even in the recovery phase, this can be slightly due to the market fears around Chinese regulatory crackdown and then the vaccine and reopening delays in the Ems. But this makes me very bullish of the future potential of the Ems as they have yet to be chased and invested. India being a case in point.

10. Furthermore, the drive to net zero can also unleash new opportunities and investment avenues, especially given the rise of new technologies and products to cater to the green energy solutions. Certain commodities, such as copper and lithium, will likely see increased demand from the drive to net zero. Yet I think it’s important to distinguish between near-term price drivers of some commodities – notably the economic restart – and the long-term transition that will matter to prices.

11. Interesting Charts: