With another record high in gold and the slightly higher than expected headline CPI reading, the implied inflation rate in the 5 year TIPS has risen 6 bps today to 1.55%, the highest level in 3 months. Expectations in the 10 yr TIPS are up 3 bps to 1.86%, the most since August 21st. One year ago pre Lehman, the 5 year implied rate was also around 1.55% (deflation was priced in during the Oct thru Dec time period). One year ago, 10 year expectations were about 1.95%. Going a bit further back for more perspective, before the world changed, 5 year expectations got as high as 2.73% and 10 year expectations were at 2.6% both in early July ’08 so there is thus room for higher implied inflation rates IF the move higher in gold is correctly discounting pricing instability in the future.
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.