Things Not Looking Good

Here’s the CNBC headline:

Jobless Claims, Inflation, Trade Deficit Each Surge Higher

As far as the inflation, they are referring to the fact that in the Producer Price Index, prices for finished goods this September were 4.0 percent higher than in September 2009, and they rose at a (seasonally-adjusted) 0.4 percent from August 2010 to September 2010, double the rate that “economists” had predicted. (I’m putting it in quotation marks not because I deny that they are economists, but because obviously it is some small sample of polled economists.)

If you click on the PPI link, however, you’ll see that this is just the tip of the iceberg. The prices of intermediate goods have risen 5.6 percent year-over-year, and the prices of crude goods have risen 20.3 percent.

So if you subscribe to a seat-of-the-pants story in which the Fed prints a boatload of money when average households are broke, so that you see prices jump first in assets and raw commodities, and only push their way through the pricing chain slowly… Well you start to wonder how long Treasury yields can stay this low.