They tried catching that falling inflation knife

Many of the world's refiners, particularly those in China and India, that were previous to last week able to buy Russian oil are now scrambling to buy it from elsewhere after the newly implemented sanctions on the Russian energy space, particularly the ships that transport its oil. In response, the price of oil continues higher by almost $2 for both brent and WTI to a level last seen in July last year.

Helped by this rise in oil prices, along with natural gas, keep your eye on inflation expectations in the TIPS market as the 2 yr inflation breakeven as of Friday's close last fell on December 30^th and is up 21 bps on this run to 2.74%. The move up in the 5 yr is higher in 8 out of the last 9 days and by 16 bps to 2.53%.

WTI

2 yr Inflation Breakeven

I argued a few times last year that central banks that were cutting rates, including the Fed and others, were all trying to catch the falling inflation knife. While inflation has decelerated notably, rather than wait until inflation was sustainably under control, many shifted their focus to their concerns with economic growth trends instead. Now of course they have a problem with the continued rise in long-term rates. This said, I do continue to believe that excessive debts and deficits are a key factor too in that the global bond police now are driving around the bad country neighborhoods with the stretched sovereign balance sheets.