The Bond Bubble And the Death of the Disinflation Trade

The disinflation trade has been profitable for the last thirty-four years as inflation and interest rates persistently moved lower, but secular demographic shifts in the United States indicate that change is on the way. Anecdotal evidence is already indicating accelerating wage growth and prices. Just last week, Jamie Dimon presented his plans to raise wages for their lowest paid employees. Starbucks, meanwhile, raised wages, and then almost simultaneously rose prices in an attempt to offset the impact to its bottom-line.