While perusing data this afternoon, we created this fun little chart:
There certainly isn’t much of an edge in the TIPS market if you want to bet on inflation. Either CPI is headed north of 6%, or TIPS buyers are going to lose money.
I’d certainly think about betting on the convergence trade here. I doubt we will see a single 6% print in the next 10 years.
In general, the inflation expectancy trade has been quite crowded for the past 6-12 months. At this point, even a small credible USD-positive statement will likely send dollars flying higher. There just haven’t been any.