The Federal Re serve took to the pulpit in force this week to preach against the dangers of inflation. On October 3rd, the president of the Atlanta Fed gave warning that monetary tightening still had "a way to go". The next day, his St Louis counterpart said the futures market was "reasonable" to price in the near-certainty of two more rises in the fed funds rate this year. The heads of the Dallas and Philadelphia Feds railed separately against inflation. They almost managed to scare bond yields much higher. Ten-year Treasury yields touched 4.4%, on October 3rd, their highest in almost two months. News that input prices had risen sharply in manufacturing added to the gloom. Investors then broadly regained their nerve and despite more bad news about prices, this time in services, yields ended October 5th at 4.34%. That was still far above the 3.98% that they hit just after Hurricane Katrina.
展开▼
