“This is not a fluke: almost all of the underlying determinants of inflation point to weakness,” writes Bank of America Merrill Lynch (BAC) economist Ethan Harris in a note to clients.
Several key measures of inflation are actually headed lower, and have yet to bottom out, according to Harris.
“This, along with the fiscal shock, is a good reason to fade the bond market sell-off,” he writes.
Fed may have to ramp up QE again
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