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
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