Inflation Roundup: ‘Inflation is Coming’ Narrative Slows Down

Contents

  • Total Returns
  • ‘Inflation is Coming’ Narrative Slows
  • Nominal Yields Detach From Inflation Expectations
  • Real Yields Won’t Move Until Fed Gets Hawkish
  • Reasons for optimism inflation will rise:
    • U.S. Consumers See Inflation (search activity)
    • Investors Infatuated with Inflation-Friendly Assets
    • Global Synchronized Growth is Here
    • Commodities Roaring Higher
    • Investors Pricing in 2.5+% YOY Critical
  • Reasons for caution:
    • Fed a Dominant Force Within TIPS Market
    • Fed Purchases Distorting TIPS Breakevens
    • U.S. TIPS Breakevens Producing Incredibly High Sharpe ratios
    • 10y Inflation Expectations Across the Globe Reach Extremes
    • Owners Equivalent Remains a HEAVY Weight on Inflation

See below for full report:

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