The inflation trade is back on Wall Street, thanks to a recent upturn in U.S. economic data and warming investor sentiment.
The 10-year inflation break-even rate, measuring the yield premium on the 10-year U.S. Treasury note over the comparable Treasury inflation-protected security, rose to 1.55% Thursday. That is the highest in nearly two months, reflecting strong demand for TIPS.
It's only the beginning. The price inflation ahead will surprise almost all---and it will be the main reason the Fed will be raising interest rates, and not pushing them back down to zero.