Stocks Are Breaking Away From Inflation Expectations

The S&P 500 has closely followed 10-year inflation expectations (the 10-year Treasury yield minus the 10-year TIPs yield). Lately, however, that relationship is showing signs it might be breaking down.

While inflation expectations have held steady at roughly 2.1%, stocks have moved higher. Until now, every 0.1% move in inflation expectations had been matched with a 35 to 40 point move in the S&P 500.

Posted by on July 19th, 2012 at 2:27 pm


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