10y breakevens are now *down* from 4.2% last week to 3.8%…?

(And 5y breakeven inflation is down even more from 4.7% to 4% …?) pic.twitter.com/csAyYP8xzI

— Basil Halperin (@BasilHalperin) September 27, 2022

Risk of British default has not gone up.  Real interest rates are up.

To be clear, I don’t envy their current macroeconomic situation.  But again, the talk of how terrible this is seems much overblown to me.

Now you might be wondering how the five-year break even rates can be so well behaved.  Well, here is a dirty little secret: there is much less stimulus in the Truss plan than people are claiming.

I don’t mean to pick on Josh Barro, of whom I am a huge fan, but his pithy summary is so clear it allows me to summarize some of my disagreements on these issues.  Here is one excerpt from his Substack:

It’s a huge

Keep reading this article on Marginal Revolution.

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