Mar

23

Here is a link to a graph of the spread between generic treasury five-year nominal yields, and generic treasury five-year inflation protected note yields.

This gap is typically referred to as the "break even yield" or the "market's forecast for inflation" over the next five years.

It seems counterintuitive that amid the subprime fiasco and the (not entirely meritless) forecasts of economic deterioration, one would see market-based inflation premia expand.

It's something to contemplate as I pack for spring break (with the kids) in the Rockies.


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