I think you've underestimated the impact rising real yields have had - heck most of the recent rise in nominals and fall in inflation expectations has been due to the rise in reals.
your point on inflation expecatations potentially being wrong is so important. right now, the Fed especially, but the market writ large, rely on that as gospel, so are happy to make the case that we are going to revert to a lower rate structure soon. But I suspect that the longer CPI remains in the 4's, and god forbid it should get back into the 5's due to energy prices, inflation expectations are going unmoor, and the Fed will be forced to react more harshly.
higher for longer
I think you've underestimated the impact rising real yields have had - heck most of the recent rise in nominals and fall in inflation expectations has been due to the rise in reals.
your point on inflation expecatations potentially being wrong is so important. right now, the Fed especially, but the market writ large, rely on that as gospel, so are happy to make the case that we are going to revert to a lower rate structure soon. But I suspect that the longer CPI remains in the 4's, and god forbid it should get back into the 5's due to energy prices, inflation expectations are going unmoor, and the Fed will be forced to react more harshly.
Very good explanations here, thanks
Great stuff 👏🙌