“People consume gasoline and diesel, not crude oil.”
o The surge in diesel prices is the biggest risk factor for the US economy
- Bank of America analyzes that the surge in diesel prices poses a greater threat to the real economy than rising bond yields.
- Diesel prices have exceeded $6 per gallon, hitting an all-time high.
o Diesel drives costs across the real economy
- Diesel is used as a key fuel in economic activities across the board, including trucking, shipping, agriculture, construction, and mining.
- Rising diesel prices → increased transportation and production costs → rising product prices → can lead to increased inflationary pressure.
If you think about it, the surge in diesel prices is pushing up the cost of the real economy and stimulating inflation again,
and as a result, it's quite an insightful analysis that pushes up the Fed's interest rates and bond yields.
▶ Original source: https://www.marketwatch.com/story/never-mind-the-bond-yields-bank-of-america-shows-where-the-real-threat-to-the-economy-lies-1e6cbeaa?mod=hp_latestnews
