Some Thoughts On The Markets: Gold, Yen, Dollar

Some Thoughts On The Markets by Economic Musings

There’s a lot happening underneath the surface in the markets right now and I thought It would be worth highlighting a few of these things.

Inflation Expectations Plummeting

Above is the 5yr inflation breakeven. As you can see, the annual inflation expectation has fallen from ~2.10% per year in July to ~1.65% today. This is a substantial drop in expectations. There’s nothing in the current inflation data to indicate that, at the margin, expectations should be plummeting. That being said, the market looks to be somewhat taken off guard by the FOMC’s higher than expected Fed Funds forecast for...