Since then, as inflation scares have eased, higher real yields have been needed to attract buyers.

"We have a classic inflation scare rasing its head again," he said.

We had a real inflation scare earlier this year, but now it appears that the Fed's pre-emptive attack worked.

Investors are not worried about the Fed because the inflation scare of earlier this year has vanished, with recent data showing prices almost flat.

Stocks staged a sharp turnaround yesterday, transforming an inflation scare into a buying opportunity.

Their prices rose enough last spring to bring on an inflation scare.

The United States has not had an inflation scare for 15 years.

But he warns that an inflation scare could prove him wrong and lift rates.

"Everyone is making this out to be an inflation scare, but I'm not sure it's not a little simpler than that," he said.

The inflation scare produced by that report caused markets to fall sharply.