Much has been said about inflation in recent weeks. Here, courtesy of The Bear Traps report, is some more.
Inflation expectations over the next three years have climbed to the highest since 2006, as per breakeven rates. They are also nearing their highest level in over 2 decades.
Despite the latest ISM reading coming in soft, below expectations the ISM Prices paid sub index hit its highest level since 2008. At the time we were already sliding into a housing crash. Note that this is a relative measure, so it only stays high if pressures continuously increase. Years 1973-74 was the only time it spent more than 2 months over 90.
US 5 year swap forwards (5 year inflation expectations, 5 years from now), are well below 3 year breakevens. This shows the market is very fearful of what happens when central banks inevitably have to tighten.
Longer term inflation rate expectations remain muted. Breakeven rates for the next 5-10 years are the lowest they've been since 2005 versus 3 year rates.
This is screaming a message: The mad mob has gone from inflation deniers to believers in a 5 year threat, now long term deniers.