IEI - Does The Return Of The Reflation Trade Have Legs?

• The Treasury market's inflation forecast broke above its pre-pandemic high this week, fueling speculation that a new era of firmer pricing pressure is dawning.
• There's a case for reviving the pre-pandemic outlook for roughly 2% inflation, but expecting a substantially hotter run still relies heavily on guesswork and dismissing the secular trends - an aging demographic, disinflationary pressure via technology, and other factors - that have prevailed over the past 20 years.
• The Treasury market's breakeven rate is useful, albeit as a rough estimate. Its main value seems to be as a gauge for identifying broad changes in inflationary trends.

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