Summary
[Break-balance inflation rate shows that the market gradually agrees with the Fed’s view]The market has not only begun to accept the view that rising inflation is only temporary, but also have decreased expectations for peak inflation. From this perspective, it is not surprising that Treasury bond yields have fallen. The break-even inflation is gradually falling, and the gap between the two-year and five-year indicators has widened, which means that the Fed has not begun to discuss the urgent need of reducing the stimulus policy. It is not even obvious that the market expects inflation to be higher than the Fed’s target. Breakeven inflation is not a precise tool. It relies on two markets with different liquidity. It includes inflation expectations, but it also includes inflation risk premiums. Given that the current path of inflation is more uncertain than usual, one should expect that the inflation risk premium for the break-even inflation rate will be abnormally high. (Golden Investment Network)
The market has not only begun to accept the view that rising inflation is only temporary, but expectations of peak inflation have also fallen. From this perspective, it is not surprising that Treasury bond yields have fallen.Break-even inflation is gradually decreasing, and the gap between the 2-year and 5-year indicators is widening, which meansMidlandThe Chu did not begin to discuss the urgent need of underweight stimulus policies.It’s not even obvious that the market expects inflation to be higher thanMidlandThe goal of the reserve. Breakeven inflation is not a precise tool. It relies on two markets with different liquidity. It includes inflation expectations, but it also includes inflation risk premiums. Given that the current path of inflation is more uncertain than usual, one should expect that the inflation risk premium for the break-even inflation rate will be abnormally high.
(Source: Jintou.com)
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