One series that DQYDJ likes to follow quite often is the market's current stance towards expected inflation over the next 5-30 years.
It's an easy calculation to make - you subtract the real, inflation adjusted yield from non-inflation adjusted yields - the missing factor is 'CPI', or what CPI the market expects over the next x years, with x being the length of the security remaining.
Is it the most accurate method? No - there are flaws to tracking estimates this way, sure - but just like tracking your body fat percentage with calipers, watching the number decrease or increase will give you a good relative idea whether inflationary pressures are rising or falling.
Okay, Tell Me The Expectations!
We've done the math for you here for October: the numbers are, as always, expectations for annual inflation over the next X years, where X comes from the column header. Stated another way, if you personally expected 1.74% inflation a year for the next 30 years at the end of last month, you'd be equally well served with inflation protected or regular Treasury securities (you know, assuming everything else - including tax treatment - was equal).
| DATE | 5 YR | 10 YR | 20 YR | 30 YR |
| 10/01/15 | 1.13% | 1.46% | 1.50% | 1.62% |
| 10/02/15 | 1.15% | 1.48% | 1.51% | 1.64% |
| 10/05/15 | 1.18% | 1.51% | 1.53% | 1.67% |
| 10/06/15 | 1.22% | 1.52% | 1.53% | 1.68% |
| 10/07/15 | 1.22% | 1.55% | 1.56% | 1.70% |
| 10/08/15 | 1.26% | 1.58% | 1.58% | 1.73% |
| 10/09/15 | 1.22% | 1.54% | 1.54% | 1.70% |
| 10/13/15 | 1.18% | 1.52% | 1.53% | 1.67% |
| 10/14/15 | 1.15% | 1.49% | 1.49% | 1.65% |
| 10/15/15 | 1.18% | 1.50% | 1.48% | 1.65% |
| 10/16/15 | 1.18% | 1.48% | 1.46% | 1.63% |
| 10/19/15 | 1.13% | 1.45% | 1.47% | 1.62% |
| 10/20/15 | 1.16% | 1.48% | 1.52% | 1.66% |
| 10/21/15 | 1.13% | 1.45% | 1.48% | 1.63% |
| 10/22/15 | 1.14% | 1.47% | 1.51% | 1.66% |
| 10/23/15 | 1.19% | 1.51% | 1.58% | 1.71% |
| 10/26/15 | 1.16% | 1.48% | 1.54% | 1.68% |
| 10/27/15 | 1.15% | 1.48% | 1.53% | 1.68% |
| 10/28/15 | 1.14% | 1.47% | 1.52% | 1.67% |
| 10/29/15 | 1.19% | 1.52% | 1.58% | 1.72% |
| 10/30/15 | 1.20% | 1.53% | 1.59% | 1.74% |
Here's how it looks visually - stability, moving to a bit of an increase near month's end:
How Has it Looked this Year?
FRED, the St. Louis Fed's Economic Research site, tracks 10 and 5 year inflation on a daily basis - so this is an easy graph to make! As you can see, we're still near the inflation expectation low points of the year (and well below the Federal Reserve's 2% inflation target).
Let us know what you think - are we really in for 30 years of less than 2% inflation? Could we see deflation at some point?
To see this data at any time - even when we aren't writing these inflation expectation articles - check out our future inflation calculatr, which runs the breakeven math for you!
