Jim Bianco

3/3 The 5-year/5-year forward TIPS inflation breakeven rate is the 5-year average annual inflation rate over the next five years (the residual from the 10-year and 5-year TIPS inflation breakeven rates). So, it is what the market is expecting the inflatio

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2/3 The 5-year TIPS inflation breakeven rate is the market’s pricing of the average annual inflation rate over the next 5 years. It has averaged 73 basis points higher post-COVID (blue) than pre-GFC (red). Also note that the standard deviation range (sha

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1/3 In the thread linked below, I argue that the bond market is worried about inflation. I can hear the response that inflation swaps and/or TIPS Inflation Breakevens are not reflecting this. Maybe they are! 🧵

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3/3 From the pod From 2009 to 2021 (12 years in red), only 5 months had inflation above 2% (3 in 2012, 2 in 2018). Currently (blue), we are in the 65 consecutive months above 2% (and actually above 3%). This is not the 2009 to 2012 cycle. We have to

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2/3 Bond buybacks, yield curve control, and/or QE (or "QE-lite") all expand the Fed's balance ("money printing"). When inflation is the worry, money printing means bonds sell off. How Bessent is doing it is not the problem. Doing it with inflation mean

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1/3 In this short (as explained in the podcast below and in this thread), the bond market is troubled by "persistent" inflation above 2% and core PCE above 3% that are not being addressed.

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