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BOTTOM LINE: Finally, the 10-year yield hit 3.51% on Friday and is near levels seen at the depths of the 2000-2003 bear market when talk of deflation was all the rage. Moreover, the ECRI Future Inflation Gauge is currently falling at a 4.5% rate. I continue to believe the recent cyclical up-tick in inflation is mainly the result of the the commodity mania. In my opinion, the secular trend of disinflation remains firmly in tact and will reassert itself during the next substantial global economic slowdown as the commodity bubble bursts.
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