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John Authers

Has the Inflationary Wave Broken? Expect More

There’s an increasing belief that economic growth is being choked out of the system and inflation is already over. Be skeptical.

You have to be ready for the next one.

You have to be ready for the next one.

Photographer: John Seaton Callahan/Moment RF

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The tide of inflation is turning, at least as far as the financial markets are concerned. Inflation breakevens, derived from the bond market, show a sharp drop in forecasts over the last few weeks, both for the next 10 years and for the five years starting five years hence. Indeed the latter, closely followed by the Federal Reserve and known as the five-year/five-year, is right back to a level it reached in February 2021 before the inflation scare took hold. According to the bond market, there’s nothing to see here anymore: