We haven't looked at inflation expectations since November 15! Quantitative easing, historically low interest rates, and a rise in consumer spending haven't been enough to increase inflation past a tame (again, historically low) 0.7% since December of 2009. However, we live in the real world and even if we were spared from inflation's clutches today, we might not be so lucky in the future. On that note, let's look at the market's inflation expectations - which we calculate by subtracting the Treasury's Daily Real Curve Rates from the Daily Treasury Yield Curve.
A Tale of 3 Dates
Let's look at the inflation curve from 9/21/10 when Quantitative Easing 2.0 was officially announced, 11/15/10 when we checked in last, and 1/28/11, the most recent date yield figures are posted.
- 9/21/10, 11/15/10, 1/28/11 Inflation Expectations (Treasury Department)
Note the increased inflation expectations over the next 5 to 7 years, which the market is now starting to explore. Also, note that inflation is expected to decline a bit between 20 and 30 years from now. Regardless, let's get your inputs!
