Dollar Finds Friends As World Realizes Bernanke Was Right |
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May 13, 2011 |
May 2011 Bond Updates
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A tame inflation report helped the dollar recoup overnight losses heading into the data although it remains weaker on the day while higher on the week. The past several sessions have highlighted to investors a couple of key facts. First, surging commodity prices are firmly behind rising consumer and producer prices. Authorities nevertheless have limited control over ‘free markets’ to contain price increases. Second, demand is showing signs of weakening on several fronts in response to rising costs. Because of this grain of truth the dollar has found its wings as the still rising ascendancy of the Fed’s view that inflation won’t gain traction when caused primarily by transitory factors. It could be said that the world’s best hope of winning the battle against inflation comes from a reversal in the dollar’s multi-year weakness as more and more central bankers figure out that Bernanke & Co. had it right all along.
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View more at: http://blogs.forbes.com/greatspeculations/?p=29669
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