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‘Impotent’ Fed policy will fail to contain 1970s-type inflation, investor Peter Boockvar predicts

 

Most people want to forget this part of the 1970s.

But inflation is back, and investor Peter Boockvar predicts it will be the most widespread in decades.

 

“Monetary policy ... is right now impotent in its ability to stimulate economic activity,” the Bleakley Advisory Group chief investment officer told CNBC’s “Trading Nation” on Wednesday.

Boockvar warns the issue is particularly evident in the housing market, which is the most sensitive to changes in rates.

 

“We are at a point where very low interest rates are no longer stimulative to the housing market,” he said. “On the purchase side, we know the dearth of inventories and sticker-shock price increases are slowing the pace of transactions.”

To Boockvar, the bigger story is the refi index’s longer-term trend.

 

Due to inflation pressures, he anticipates the benchmark 10-year Treasury Note yield will break above 2% before year’s end.

“That will create its own hurdles for the stock market,” Boockvar said. “The stock market has rallied here of late, and it’s back to highs because of the pullback in yields.”

 

The 10-year yield closed at 1.49% on Wednesday, slumping more than 6% over the past week.

 

Reference: CNBC