Bond markets are indicating inflation could stick around for a while and that’s bad news for Joe Biden – By John Sexton (Hot Air) / Oct 26 2021
Let’s just say up front that there continue to be conflicting signals about whether or not inflation is a very short term problem or something that might last a while. Just today, Goldman Sachs released a research note saying inflation resulting from supply-chain issues will continue into next year but will be on a steep decline and should be back around 2% a little over a year from now. But the alternative view, that inflation could be around longer is picking up steam and that could be very bad news for President Biden.
Today, the NY Times notes that a critical metric called the break even point, an estimate of what investors in the bond market think inflation will be going forward, jumped up to about 3 percent for the first time in more than a decade last Friday.
A key measure of the bond market’s expectations for inflation over the next five years — known as a break even — rose to a new high Friday, briefly topping 3 percent. That meant investors expected inflation to average about 3 percent a year for the next five years, far higher than any time in the decade before the pandemic hit. Measures of inflation expectations over longer periods, such as over the next 10 years, also rose to multiyear highs…
