Chart Spotlight: Is Inflation Lurking Around The Corner?

Korey Bauer

Monitoring Inflation

I was scanning through some charts today and found something that I found quite amazing in regard to inflation expectations.

The chart below depicts the spread between the ten-year U.S. breakeven minus the five-year U.S. breakeven inflation rates.

What are inflation breakevens? These indices are calculated by subtracting the real yield of inflation from the closest nominal Treasury maturity. The spread between five-year inflation and ten-year inflation is at the flattest levels since 2008. The spread collapsed right after Trump was elected back in November because the market is anticipating pro-growth policies from Washington.

Now we just have to wait to see if the market is right…

 

 

Thanks for reading.

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