Taps Coogan – July 10th, 2022

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As the following chart highlights, the market’s implied average inflation measures over the next five and ten years (5-year and 10-year TIPS breakevens) have finally started to meaningfully drop.

While hardly back to pre-Covid levels, the treasury market’s implied inflation measures have been dropping for over two months now. Along with falling commodity prices and moderating supply chain issues, the case is strengthening that the year-over-year peak in inflation may be at hand.

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