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The More Yellen Talks Up Inflation, the Less Traders Believe Her

  • Market inflation expectations fall to lowest since 2009
  • Yellen reiterates view inflation will rise gradually
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When Will Monetary Policy Distortion End?

Updated on

The bond market isn’t buying what Federal Reserve Chair Janet Yellen is selling on inflation.

While she reiterated last week that the Fed expects inflation to gradually rise back near 2 percent, long- and short-term market forecasts for price gains have plunged to their lowest levels since 2009. That’s even though oil prices remain about 16 percent above their lows from late August. The difference between yields on inflation-linked Treasuries and those on nominal securities plunged by the most in four years Monday.