Macro Reflation trade: Deflation risk persists

An April 14 story on Bloomberg said that the ECB may have to lower interest rates below 1.25% next month to counter the worse recession in six decades.
And the FED continued its quantitative easing Monday purchasing $7.37B in Treasuries and $5.15 B in Agency debt. Treasuries ended strong with the Ten Year Tsy Bond at 2.845%, below the recent high water mark of 3%.
An April 14 article in the WSJ in David Gaffen’s column entitled Marketbeat, says high grade corporate bonds may be the place to be positioned. Dealogic says $975B in bonds were issued YTD. Corp bonds offer safe yield presumably.
The crew on CNBC’s Fast Money peddled industrial metals . aluminum, copper and steel saying gold is out of favor now under $900 with no rally in sight. The inflation traders favor oil over gold.
Should the economy recover many investors are betting on commodity stocks to lead.
Here is how these reflation trades have fared since mid-December 2008:
Gold miners up: AUY up 24%,GDX up 11%
Silver up 19%
PCN corp bond fund up 19%
TBT Tsy short ETF up 7.6%
FCX copper gold miner up 96%
The NASDAQ Q’s were up 11%
Losers were real estate IYR down 15%, natgas UNG down 37% and at a new 6 yr. low of $3.628.
REITS and real estate investments made a huge move last Friday but reversed abruptly today with the IYR down 8% today.

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