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After a wild final week of a volatile month, it’s becoming increasingly clear that something is spooking investors. That something is the potential for a surge in inflation later this year.
Investors are justifiably concerned that the combination of sustained Fed interest-rate suppression and trillions in additional fiscal stimulus will result in a burst of pent-up demand that outstrips the supply of everything from haircuts to plane fares. The evidence supporting this possibility is mounting.
Longer-term interest rates have risen sharply, with the 10-year yield rising to about 1.40% today from around 0.91% at the beginning of the year….