What's Been Going On Over the Last Week Or So

It's been a relatively uneventful week or so with one exception. Bond yields had bubbled up and gotten everyone's underwear in knots. The financial media waxed on about how stocks would collapse as yields rose: It didn't happen. Then there was the "inflation's coming" theory; but there's not real evidence of that - yet. "The economy is heating up" had its moment in the sun, but "heating up" may be a bit exaggerated - at this point. And, of course, there was some of the "fiscal crisis" that will be caused if rates keep trending up.

That one's my favorite because we've been hearing it for years. The logic: As outstanding issued treasuries come due, and require refinancing, if they're refinanced at higher and higher rates, eventually a higher and higher percentage of the federal budget will be dedicated to paying the ever-increasing interest due on the outstanding treasuries: a sound theory, but so far it hasn't happened.

One way to put the recent rise in context is to take a peek at this chart

 

This guy goes back three years. You see the tail end of the longer-term bull market in the US dollar reverse in 2017. You also see that we've had a reversal in the downward trend twice since the beginning of 2017: once towards the end of the year, and now this reversal. Of course, that doesn't make for exciting or even interesting news. So the media prefers headlines like this recent one from the Wall Street Journal:

Dollar Roars Back as U.S. Growth Story Wins Over World Markets

Much, much more interesting, don't you think? We'll believe it when we actually see this reversal turn into a real roar.

So rather than gin up another story with a dramatic spin, let's just settle into our new week focused on the work at hand, whatever that might be. For us, it certainly entails keeping an eye on the markets. For most investors, however, reading a good book might be a better use of your time.