Why are you comparing the 5- and 10-year break even rates to 1 year inflation?The bond market does a terrible job of predicting inflation (e.g. TIPS spreads) so I really dislike the use of "unexpected inflation" because it gives a pseudo-random reactive market unearned prescience.Long term Treasuries can lose a lot of money quickly when unexpected inflation takes off as happened in recent years.
Please note what an absolutely terrible job the 5 and 10 yr TIPS spreads do at predicting future "expected" inflation:
I invest in treasuries based on the principle that all inflation is unexpected and that except for very short-term treasuries treasuries also do a terrible job of predicting future changes in the Fed funds rate.
Statistics: Posted by toddthebod — Wed Jul 31, 2024 3:11 pm — Replies 31 — Views 3912