Inflation expectations are rising
From the inflation-protected bond market via Grep Ip, here is the the “five-year, five-year forward” breakeven rate. It reflects the market's expectation of five-year inflation beginning five years from now.
A rise in expected inflation is not consistent with the conventional wisdom that the economy is on the verge of a serious slump driven by inadequate aggregate demand. It is, however, consistent with the hypothesis that policymakers are overreacting to some bad economic news with excessive monetary and fiscal stimulus.
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