Wednesday, December 12, 2007

Inflation Expectations Spooked

Check out today's bounce in the 5-year inflation expectations trend. The reason it is there (as seen in the chart) is because interest rates bounced higher on the nominal 5-year treasury bond today but did not bounce similarly high on the 5-year TIPS.

Import prices rise 2.7%, the most in 17 years
"Today's data imply substantial upside inflation risk over the near-term," wrote Mike Englund, chief economist for Action Economics.

See Also:
Bernanke's Inflation Expectations
Calculated Risk: October Trade Deficit

Source Data:
FRB: Selected Interest Rates
Bloomberg: Rates & Bonds

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