CRB Breakout Continues

In mid September, I posted this chart when it was in its infancy - in short, the CRB was breaking out from the 270s. Today it resides around the 300 level which is a strong move. Interestingly, when I posted that note, my argument was that inflation was now going to be a problem and the bond market had to take notice. If you look at the new addition to this chart, the long bond yield, it is not making new lows like the rest of the UST curve - it is paused and if it continues to follow the CRB, the next move higher for the bond should be developing now (yield wise). I stand behind my bearish call on bonds.

The downside of course to a skyrocketing CRB and bond yield is probably some downward pressure on stocks. At the same time, given the abnormally low PE of the S&P on a forward basis, perhaps this move upward in bonds is now priced in. 

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• More Fed help for economy now just a matter of time (latimesblogs.latimes.com)
• How to Prepare for the Bond Market Bust (money.usnews.com)
• Front-running the Fed (ftalphaville.ft.com)