Oil, Gas, CPI, and Yields All to Move Higher
The 10YR yield has crept higher over the past few days. Bondholders have figured out that CPI will move higher when July numbers are reported on Wednesday as the price of oil has increased over the past month.
The 10YR Treasury yield is still far too low if you ask me given the United States’ $40 Trillion debt overhang coupled with the fact that Iran is now the dominant power in the Middle East.
The Dollar has lost some of its grip on the oil industry going forward with Iran now controlling oil in the Middle East. This is a permanent change.
Less oil under U.S. control means less oil with which to underwrite Dollars, which means more price inflation over the coming decades.
The Trump Admin better hope that Iran proxies don’t start to smack Saudi oil production as that will drive the price of oil higher in the immediate term.
My guess is that Iran will continue to squeeze the U.S. until it gets 100% of what it wants, which it will.
Therefore, the price oil and gas at the pump is likely to move higher through the mid-term elections.