Inflation is Soaring

The Consumer Price Index for May was released this morning with inflation hitting 0.6% above April prices. Year over year the CPI is up 5%, the biggest increase since 2008. Even the Core CPI, which excludes the volatile food and energy sectors, saw prices soar by 0.7% from April and the Core CPI rose 3.8%, the highest reading since 1992. WOW!!!

But, yet the 10 Year Treasury Bill yield is 1.49%. WTF? It’s called Yield Curve Control by the Fed as the Fed is buying so many Treasuries and mortgage bonds that they refuse to tell us how much they are buying now. Before they were buying about $120-$150 billion a month. I bet they are buying over $200 billion a month currently.

But, 4 Fed members are now saying that the Fed needs to start talking about reducing their purchases of Treasuries and mortgage bonds. But, the Fed is also very concerned about a second “Taper Tantrum”. Thus, another reason why they are no longer telling us how much they are buying every week.

So, the Fed’s “actions” now speak louder than their words it appears. And when the Fed begins reducing their buying we will see mortgage rates rise and probably rise very substantially. Thus, a second STRONG REASON to not wait to buy a new home.