Inflation Expectations Suggest 5% Inflation Is In The Cards

Tyler Durden's picture

Color us stunned. While the world and their pet cat Roger are not worrying about inflation because Bernanke says CPI/PPI are still well-anchored and everything else is "transitory"; it turns out the market has a 'different' opinion. We have discussed inflation expectations before (whether 5Y5Y forward views or 10Y inflation swap breakevens) as a trigger for Fed action (or inaction) but this time, the market front-ran Bernanke's Bazooka and in the last two days of QEternity has exploded higher with 5Y forward expectations now near 6 year highs. CPI remains below 2% but there is a clear lag between the rise in market-implied inflation and it showing up in the unicorn-laden CPI prints - what this means is that given the hubris of the Fed yesterday, market expectations of inflation are inferring CPI could rise to over 5% within the next 3 to 6 months. It will surely be difficult for Ben to keep-on-buying ('Finding Nemo'-like) in the face of that kind of 'transitory' rise in real data - though for now, real money remains bid as risk comes off a little (even as the long-bond yield blows 26bps higher this week) - oh and CPI and PPI jump their most in 3 years.

CPI vs inflation break-evens and forward expectations...


and longer-term - this has not ended well as once it runs, it is hard to stop...

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Michael's picture

It looks like on TV, that's always muted while listening to AJ, their finally showing dead troops coming home in coffins and body bags who were killed in Afghanistan and Iraq.

It's about time our dead solders are being honored by being shown on Jewtube MSM TV.

redpill's picture

You're really on a single track with the Jew thing, aren't you.  There are plenty of non-Jewish evil fuckfaces in this world, how come you never carry on about them?

Fake Jim Quinn's picture

He sits home and masterbates while typing on chatboard because no one else listens to his squeaky voice. A pathetic little hateful loser. Ignore him and let him ultimately commit suicide, and do the world a favor

economics9698's picture

If you want a better picture of the inflation rate when you go to FRED[1][id]=CPIAUCSL

Change the reading from indexed 1982-84 to % change from a year ago.

Last reading was 3% which was a lot more realistic than 1.4%.

It seems to work.

aerojet's picture

True, but I'm as tolerant as can be and even I have to admit that Jewish people seem to occupy a disproportionate number of influential leadership positiosn within the US Government and the media.  Whether they are working in concert is an open question, but they certainly have biases towards their culture that are being played out within policy circles and in boardrooms around the US and the world.

KK Tipton's picture

I just wish they would admit they are the spawn of Egyptians and Babylonians.

Then everything would make sense to the rest of the world.

PS - The Maasai from Kenya are the ex Egyptian soldiers. Kicked out at the same time as the "hebrews".They were sent to the south instead.


Know somebody else who has Kenyan (Egyptian) warrior DNA?
What is he doing these days?


economics9698's picture

aerojet, when you own the printing press your guys get to win all the time.  Since 1965 this shit has gotten out of hand and there will be a backlash, sever, when all the good white upper middleclass people realize their money is not worth shit.

Look for a lot of bankers to be on the end of a rope and you can bet a lot of them will be Jews.

Non Passaran's picture

If you are tolerant that does not mean you are capable of superior insight.
I believe dickheads like some folks on this site give them hard time when they try to integrate elsewhere so frequently they go to sectors where they are more people of the same group. That's a no-brainer for any group of people - any ethnic group, sexual orientation, etc.

WhiteNight123129's picture

The problem is that all non-jew bankers  got Scott Free in Nazi Germany and innocent regular jewish people, jewish musicians and artists got atrociously murdered in Nazi Germany. Don t get played into the blame the minority shit, blame the government and politicians first. THe politicians always want a scape goat, then you can have an equal opportunity sentencing of bankers next, but get the politicians first.


Fake Jim Quinn's picture

We just had four patriotic Americans killed over hate. Can we give the racial prejudice a rest for a while?

KK Tipton's picture

If all people knew about history, and about the deceptions foisted on them, then those Americans would not be dead.

Some "races" are following scripts handed down to them from *way* back.
They need to understand the lies...and rip the scripts up themselves. Then we can all live peacefully.

Problem could be worse though.
Genetics and genetic memory can't be overcome?

If so, then the scripts might not matter as much.
Pull back the troops and let the world do what it wants then. Screw interventionism.

Michael's picture

Great insight Tipton.

I just see it as a character flaw they need to overcome, and they should diversify their skill set learning to be mechanics and laborers.

Michael's picture

I just mentioned  the Irish POS O'Reilly yesterday on the TV, everyone knows is owned by Jews. I also bash the CIA, FBI, Mossad, and MI5.

JPM Hater001's picture

"It's about time our dead solders are being honored by being shown on Jewtube MSM TV."

Please dont paint an entire group.  I know a number of very good Jews.  Some even like Bacon.

Kosher Bacon of course.

LawsofPhysics's picture

Multiply that by how leveraged a given country's banking balance sheet is and you will get the real number.  hedge accordingly.

Oh regional Indian's picture

India has real inflation somewhere in the late teens or early twenties.

Someone is exporting inflation and someone seems to be importing it.

Hmmmm.... wonder which is who...



LawsofPhysics's picture

indeed, seems like there has to be a silver lining somewhere.

Oh regional Indian's picture

Interestingly enough LOP, there is. Silver in Rupees is waaaay up in the past week or so. Rupee is weakening too.

All very interesting.


JPM Hater001's picture

So 5% inflation....are we still talking about 1999?

economics9698's picture

On the subject of Fed leverage, it is one thing to purchase long-dated bonds when yields are high. It is another to purchase them when yields are at record lows and very small yield changes are capable of wiping out all interest income and leaving the Fed in a loss position when it is already levered 53-to-1 (2.9 trillion of assets on 54.6 billion of capital, according to the Fed’s consolidated balance sheet). At a 10-year Treasury yield of just 1.6% and a portfolio duration of about 8 years (meaning that a 100 basis point move causes a change of about 8% in the value of the securities held by the Fed), it takes an interest rate increase of only about 20 basis points (1.6/8) to wipe out a year of interest on the portfolio held by the Fed and push it into capital losses. It would then take another 24 basis points to wipe out all of the capital on the Fed’s balance sheet. Of course, they don’t mark the balance sheet to market. So the public might not be aware of those losses, but that would only mean that we would have an insolvent Fed printing money on an extra-Constitutional basis to fund its own balance sheet losses instead of public spending.

LongSoupLine's picture

Hence forth...

Silver bitchez.

SwimmininNawlins's picture

Inflation, that's good for everyone right?

SwimmininNawlins's picture

Someone get Scott Sumner a Nobel Prize

cynicalskeptic's picture

Zimbabwe had the world's best performing stock market in the world for a while - and some of the busiest printing presses.....

But who cares if you're a millionaire... billionaire... trillionaire if you can't buy a loaf of bread?


And fiat makes lousy toilet paper - clogs the pipes.

SwimmininNawlins's picture

However, toliet paper makes great fiat

Nobody For President's picture

It ain't called 'mountain money' fer nothin'

ziggy59's picture

Does do a job on the cling-ons tho

Yen Cross's picture

 "Bond Vigilante alert"

you enjoy myself's picture

except the Fed snapping up every single bond is QE4.  Ben has painted himself into one hell of an epic corner.

DavidPierre's picture
John Williams - Sell-Off in Dollar Will Evolve into Hyperinflation

JohnKozac's picture

I heard Williams on a radio interview last Fall opining silver might run up to $200.


Ya never know, eh.

redpill's picture

Well shit, and I thought he just composed soundtracks.

uno's picture

that's what the Bernake wants, dollar gapping down vs everything fiat 

Mr Lennon Hendrix's picture

Except the Yen.

The BoJ knows how to print with the best of them.

Cognitive Dissonance's picture

"Inflation Expectations Suggest 5% Inflation Is In The Cards"

Sure. But after backing out inflated inflation, core inflation will be well under control at less than 1%.


akak's picture


"Inflation Expectations Suggest 5% Inflation Is In The Cards"


So, in other words, we are being led to believe that the real rate of inflation is going to fall to only 5%?

I'll believe it when I see it (and I am not going to hold my breath waiting).

Jason T's picture

Inflation will come becaues we have failed miserably to invest in our fixed assets... shit is going to start breaking down and all that'll be left to pay to fix anything will be stamps with the word food on them.

e-man's picture

Does 5% inflation take into account the repatriation of foreign-held US dollars?  Assuming that other nations also understand the meaning of QE infinity?

ejmoosa's picture

Other nations understand?  Who do you think is funding all of those "We Buy Gold" locations?

And where do you think all that metal is going?

Vegamma's picture

'Finding Nemo'-like. Well played. I will now hear Ellen Degeneres's voice whenever I hear the Bernank talk about QEX.

JohnKozac's picture

Looks like the COLA for old folks (like my Grandpa) or anyone hitched to that CPI will be about 1.7%. Luckily he is  a barbarian and hol;ds substantial PMs in his banj safety depost box. In fact, he is the one who turned me on to Ron Paul and Peter Shiff years ago.


Bless him ::))


Dr. Engali's picture

I'd say that 5% inflation is generous and an improvement over where we are now.

Overfed's picture

I wish we could go BACK to 5%.

fourchan's picture

world wide race to the bottom continues.

q99x2's picture

Poor people aren't affected by inflation because their complaints don't matter. Until they go fucking beserk of course. Then its like dude have you tried to get a job. I tried now I'm trying this M'fer. Aaagghhh I eat banker. Show me banker.

KK Tipton's picture


And the people at the top don't use money. So, like, they don't care what "inflation" is.
Paris Hilton just hands a plastic card across a counter and people give her stuff.
Or, they just give her stuff...flat out.

The poor have to take chances to get all their stuff.

tawse57's picture


It would be really good if you can put together a short article about the implications of QE3 re PMs, stocks, cash, etc, is now for all the numpty Joe Public retail investors who read ZH.

I suspect there are thousands of people who read this site with money in cash and wondering whether they go buy PMs or they go buy stocks or whether the stock market is just suckering in retail investors now through QE - something that goes beyond the usual comments of "got gold" or "silver bitchee".

I bet many of your readers would appreciate something that weighs up the pros and cons of where we are now after QE3's arrival.

Cash is obviously being eroded but are PMs and stocks just bull traps to fleece retail investors panicked into investing in either or both?

Are we going to see, just like after QE1 and QE2, a big spike up in PMs and stocks before a crash down... and then a gradual build up in both again?

I suspect most readers here are Joe Public retail types and not Wall Street Traders or survivalists living out in the woods burying silver in plastic tubing.


Thank you.


SwimmininNawlins's picture

Buy FaceBook stock. Remember buy low & sell high

CharlieSDT's picture

It seems like QE3 was already priced in the markets.  Money printing is like heroin, the more you do it the more you need to do to get that same high.