It only took the bonds about 1/2 hour to conclude that continued expansion of the fed balance sheet and buying the bad assets of their colleagues and clients was inflationary.

Rocky Humbert replies:

I respectfully disagree with the Chair's interpretation of Mr. Market's belief. I am sitting here watching the TIP market … and it's not inflation expectations that are rising, rather it's the REAL YIELD. (An economist would say the real yield is a function of the real growth rate, the risk premium for default, and competition with other investments…. so it's Mr. Market saying growth is ahead, not inflation.)

Inflation expectations as measured by the TIPS market continue to tick downwards, not upwards…

(Am waiting for George Z. or someone else to say that the TIPS market is a BS market signal because ….blah blah blah)

Please wake me up when the real yield on the 10yr tips goes positive. Looks like it's at least 3 or 4 points away.





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