Stock Returns and Inflation Expectations

I wanted to see how well the stock market has performed at different points of the 10-year breakeven inflation rate. I took the Wilshire 5000 Total Return index and saw how it performed against the 10-year breakeven.

The results are interesting.

Since 2003, the Wilshire 5000 has gained 14.54% when the 10-year breakeven is 2.36% or less.

When it’s 2.37% or more, the Wilshire has an annualized loss of 0.21%.

Since 2003, the 10-year breakeven inflation rate has been 2.36% or less about two-thirds of the time. It’s currently at 1.87%. It’s been below 2.36% continuously since April 30, 2013.

Posted by on July 8th, 2015 at 2:35 pm


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