Daily Archives: May 20, 2011

Is The Treasury Market’s Inflation Forecast Flashing A Warning?

The outlook for inflation is dropping fast, according to the yield spread between the nominal and inflation-indexed 10-year Treasuries. That’s worrisome if the economy’s growth momentum is slowing. Although some pundits argue that higher inflation is a big risk, the Treasury market is telling us different. If the economy is downshifting, falling inflation expectations are a sign of trouble.

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