Fed’s Kashkari: ‘I’m Not Seeing Evidence Yet that Long Run Inflation Expectations Are Climbing’

LIESMAN Before you get ░░░░░░░░ the inflationary dynamic of ░░░░░░░░ bond market Neal one ░░░░░░░░ the remarkable developments has ░░░░░░░░ this that at a ░░░░░░░░ when there s concern ░░░░░░░░ the globe the general ░░░░░░░░ has been to trade ░░░░░░░░ U S assets as ░░░░░░░░ flight to safety That ░░░░░░░░ not happening now The ░░░░░░░░ is selling off this ░░░░░░░░ against a broad range ░░░░░░░░ currencies Yields have been ░░░░░░░░ Is it curious to ░░░░░░░░ And what is it ░░░░░░░░ you that there is ░░░░░░░░ obvious or traditional flight ░░░░░░░░ safety in the current ░░░░░░░░ KASHKARI Yeah I think ░░░░░░░░ observation goes to the ░░░░░░░░ of the matter And ░░░░░░░░ always go back to ░░░░░░░░ Why do we have ░░░░░░░░ trade deficit in America ░░░░░░░░ decades It s because ░░░░░░░░ is just the math ░░░░░░░░ economics investors around the ░░░░░░░░ have viewed America as ░░░░░░░░ best place to invest ░░░░░░░░ if that s true ░░░░░░░░ will have a trade ░░░░░░░░ And so now one ░░░░░░░░ the ways that expresses ░░░░░░░░ is in lower yields ░░░░░░░░ asset classes in America ░░░░░░░░ if the trade deficit ░░░░░░░░ going to go down ░░░░░░░░ could be that investors ░░░░░░░░ saying Okay America no ░░░░░░░░ is the most attractive ░░░░░░░░ in the world to ░░░░░░░░ And then you would ░░░░░░░░ to see bond yields ░░░░░░░░ up Now it also ░░░░░░░░ be inflation and that ░░░░░░░░ why this matters a ░░░░░░░░ to the Fed I ░░░░░░░░ not seeing evidence yet ░░░░░░░░ long run inflation expectations ░░░░░░░░ climbing and it s ░░░░░░░░ Fed s job to ░░░░░░░░ sure that that doesn ░░░░░░░░ happen But I would ░░░░░░░░ to see if investors ░░░░░░░░ Hey we want to ░░░░░░░░ elsewhere all else equal ░░░░░░░░ ought to be pushing ░░░░░░░░ yields and you d ░░░░░░░░ that in what we ░░░░░░░░ the term premium.”