(my two cents) When #breakevens and #swaps diverge like this, the #swap rate is generally the better signal on actual inflation expectations, while the breakeven gap tells you something about market stress and liquidity demand for safe assets.

US 1y #breakevens now project 5% #inflation, which would be disastrous. US 1y #swaps suggest a rate above 3%. The split shows the difficulty assessing the shock. But the direction of travel proves that #alarm is intensifying, notes @johnauthers.bsky.social

10y UST #breakevens imply core #inflation is returning closer to 2%, while current levels remain closer to 3%, notes #MorganStanley

#precious #metals are an #inflation hedge. Yet the most direct market #inflation forecasts, from #swaps and from bond #breakevens, agree that #inflation will stay within the ranges of most of the last two decades, chart @johnauthers.bsky.social

It’s noticeable that #German #breakevens are falling (despite a #fiscal splurge that is on its face #inflationary) - they are now below 2% — while US #breakevens are stuck above the target level, chart @johnauthers.bsky.social

1y UST inflation #breakevens derived from bond prices suggest #inflation will touch 4% over the next 12 months, and average 3% over the next 24, chart @johnauthers.bsky.social

Bond market #inflation #breakevens rose Friday, but it’s doubtful they’re yet at a deterrent level, chart @johnauthers.bsky.social www.bloomberg.com/opinion/auth...

5y #inflation #breakevens, derived from the bond market, now imply that prices will rise at an average of less than the #Fed’s target 2% per year for the next 5y. The breakeven is its lowest since late 2020, chart @JohnAuthers www.bloomberg.com/opinion/auth...

After spiking in 2022, US #inflation expectations have steadily trended back to normal. In fact, professional forecasters surveyed by the @PhiladelphiaFed and investors trading 5y #breakevens both expect annual CPI inflation of 2.3%, chart @JPMorganAM