Broker Check

That $1.9 Trillion Stimulus Might Cause Inflation

| March 11, 2021

Watch the 10-year and oil because inflation eats away at retirement income 

The current job market landscape is a warning sign of
how painful the U.S. economy is for many, as over
745,000 Americans filed for first time-unemployment
claims at the end of February.

But then on March 5th, the February employment
report showed the U.S. economy added 379,000 jobs
in the month. This was more than double January’s
gain and the best growth since October. And
February’s employment report also showed that over
350,000 jobs were added within the leisure &
hospitality sector, which could point to a recovery in
that hard-hit segment of the job market.

Without engaging in the controversial debate as to
whether the current job market landscape does or
does not support the argument for additional targeted
stimulus, there is another side to this conversation
that we need to remember too: continued monetary
stimulus might lead to inflation, maybe even
hyperinflation, which could be bad for your retirement.

As such, there are two data sets that are worth
examining when thinking about inflation and the
impact on your retirement nest egg: the rise in the 10-
year Treasury yield and the price of West Texas
Intermediate Crude oil. The first might foreshadow
inflation whereas the second might contribute to it.

10-Year Treasury Yields are Climbing

The yield on the 10-year U.S. Treasury has more than
doubled in the past year