For those foolish enough to pay attention to my predictions, here are a few thoughts on the current condition of the economy. First the data:
1.) Stocks hitting all-time record levels.
2.) The yield curve un-inverting, back to a normal slope.
3.) But 2-year yields remain below 3-month yields.
4.) Five-year TIPS spreads at 1.87% (implying PCE inflation closer to 1.62%).
The TIPS spreads might be slightly biased by risk premia, etc., but overall I suspect that inflation expectations actually are below 2%, say in the 1.7-1.8% range, over the next 5 years.
The most