EDITOR'S NOTE: In the 1970s, the average cost of gas was around 39 cents per gallon. At the time, the price was painful. It was a period of high inflation, similar to what we’re experiencing today. Yet if we were to adjust that price to today’s dollars, 1970s gas prices would amount to $2.78. The average cost of gas today is $4.67 per gallon. In some places, like California, it’s as high as $8.00. Clearly, gas prices are at their highest levels in history. Meanwhile, the Fed’s reverse repo program (RRPs)—where banks park their excess cash, we’re guessing, because they can’t find any other place to put it—is seeing a sudden shift in soaring demand. There’s so much demand for RRPs that banks are virtually parking their money just to get it right back. Something is amiss in these actions, and it’s beginning to look a little suspicious. Yes, it’s a dark omen for the US economy, but what does it mean, exactly?
Markets opened after a long (and expensive) Memorial Day weekend, with the 10-year Treasury yield up 8.1 basis points.
Meanwhile, banks continue to park funds at The Federal Reserve in the form of reverse repos as global inflation soars.
Source: Confounded Interest
And then we have US gasoline prices rising to the highest in history.
Source: Confounded Interest
Its like banks know something that the rest of us don’t. Although we do know about the highest gasoline prices in history.
Source: Confounded Interest
Originally published on Confounded Interest.
