The specter of rising inflation is helping power assets like gold, silver and Treasury Inflation-Protected Securities (TIPS) to strong returns with record demand this year.

• Investors continue to pack in even as inflation metrics like the consumer price index (CPI) and personal consumption expenditure (PCE) index have remained anchored.

What's happening: The Fed has added close to $3 trillion to its balance sheet since March and Congress passed the $2.2 trillion CARES Act, leading to an unprecedented increase in U.S. money supply.

• The stimulus efforts have helped push stock and bond markets higher, but in recent months the gains of precious metals have far outpaced them.
• In July, the value of gold and silver rose by 11% and 33%, respectively, with silver up 62% over the last three months.
• The dollar suffered its worst month in a decade in July, which boosts the value of commodities priced in dollars.

By the numbers: In the first six months of the year, total investment demand for gold reached a record value of more than $60 billion even as demand for jewelry, bars and coins fell, the World Gold Council announced Thursday.

• Global net inflows to gold ETFs reached $39.5 billion in the first half of the year, "significantly above the highest level of annual inflows," WGC noted, both in tonnage terms (646 trillion in 2009) and dollar value ($23 billion in 2016).
• "To put this strength of demand into context, H1 inflows are also significantly higher than the multi-decade record level of central bank net purchases seen in 2018 and 2019."
• Global holdings of silver rose 10% in the first half of the year and silver ETF holdings surpassed the previous record for a full year, according to the Silver Institute.

TIPS have been so well bid that yields, which move inversely to prices, have fallen to historic lows on some maturities. The 10-year TIPS yield has recently dropped to almost -1%, Reuters reported last week.

• TIPS funds have seen net positive inflows for six straight weeks, including the two best weekly net inflows on record (the weeks ending June 24 and July 1), according to Refinitiv Lipper.

What to watch: Fed chair Jerome Powell has said the U.S. central bank is not even "thinking about thinking about thinking about" raising U.S. interest rates, and WSJ reported Sunday that the Fed is considering an overhaul of its long-term strategy of raising rates early to head off rising inflation.

• That could mean the central bank pulls back on its commitment to keeping rates in check right as inflation returns.

As the coronavirus pandemic throttles economies around the globe, central banks are keeping rates low and using quantitative easing policies similar to the Fed's even in some emerging countries.

• Since 2019, emerging market central banks have provided more than 5,500 basis points of interest rates cuts, per Bloomberg.
• But in some emerging countries, including India, Mexico and Turkey (three of the largest), inflation already is rising out of central bankers' target ranges.

Why it matters: Policymakers are likely to face a grim choice very soon: whether to continue to support economic growth by keeping rates low and risking a marked increase in inflation, or raise rates to tamp down on inflation and risk exacerbating the coronavirus-driven recession.

Microsoft will "move quickly to pursue discussions with TikTok’s parent company, ByteDance, in a matter of weeks," following conversations between President Trump and the tech giant's CEO, Satya Nadella. (Microsoft)

Marathon Petroleum will sell its gas station business to the owners of 7-Eleven for $21 billion, the largest U.S. energy deal of the year. (WSJ)

Lord & Taylor became the latest retailer to file for Chapter 11 bankruptcy protection on Sunday. (Bloomberg)

Minneapolis Fed president Neel Kashkari suggested the U.S. undergo a "really hard" 4–6 week lockdown with another round of strong fiscal spending to get the coronavirus pandemic under control. (CBS News)

With new coronavirus relief measures stalled in Congress, a group of chief executives from some of the country's most prominent companies has banded together to send a message to Washington: Get money to small businesses now!

Why it matters: "By Labor Day, we foresee a wave of permanent closures if the right steps are not taken soon," warns the letter, organized by Howard Schultz and signed by more than 100 CEOs.

• Signatories include the heads of Salesforce, Alphabet, Walmart, McDonald's, Disney, IBM, the Business Roundtable, and U.S. Chamber of Commerce.

What's happening: The open letter to House Speaker Nancy Pelosi, Senate Majority Leader Mitch McConnell and other top lawmakers obtained first by Axios lays out a recipe for a sizable small-business aid package.

What they're saying: It calls for "federally guaranteed loans, at favorable terms, that will enable small businesses to transform and sustain themselves through 2020 and well into 2021."

• "Businesses should have flexibility in how loan funds are used."
• "The hardest-hit businesses should be eligible for at least partial loan forgiveness."
• "Any forgiveness should be limited to small and mid-sized firms that have suffered significant revenue declines and are not publicly traded."
• "Relief needs to be delivered expeditiously. Building on the existing PPP infrastructure would be one way to quickly stand up a new loan program."
• "These funds must flow to all small businesses in need, particularly those run by people of color, who have traditionally had less access to capital."
• "A portion of funds should also be directed toward strengthening community development financial institutions (CDFIs) and minority depository institutions (MDIs)."

Between the lines: Neither the House's HEROES Act nor the latest version of Senate Republicans' HEALS Act include significant funding for small businesses besides the extension of the widely panned Paycheck Protection Program, which still has around $150 billion unclaimed.

The last word: "Tens of millions of Americans have already lost their jobs in this pandemic. ... By year end, the domino effect of lost jobs — as well as the lost services and lost products that small businesses provide — could be catastrophic."

Economists at major investment banks are expecting to see job growth reverse course when July's jobs report is released on Friday.

Why it matters: After 20.5 million Americans lost their jobs in April, the worst jobs report in history, May and June saw an unexpected bounce in hiring, but data suggest that bounce has ended.

What they're saying: "[S]ome survey indicators are suggesting that labor market progress has already rolled over and July payrolls could be negative," Deutsche Bank economists said in a note to clients.

• They expect July's report to show a loss of 400,000 jobs, but warn "it is not clear that the recent rolling over in labor market data will be fully captured in next week's July jobs report."

It could be worse: "High frequency data suggest that the labor market recovery is stalling due to the worsening virus situation," economists at Goldman Sachs wrote in a note to clients Friday night.

• "Our trackers suggest that current household employment has fallen by roughly one million since the June survey week."

Yes, but: Economists' predictions were off by 10 million in May. So there's that.