Breakeven Inflation

Inflation or deflation argument of late reminds me of the old Lite beer commercial taste great or Less Filling.Plenty of opinions on the subject and rightfully so as short to medium term forecast depend on which one you may believe in. I myself believe Dis- Inflation will be around for a bit longer then 2022 but just my opinion. Below are two charts that show what break even inflation markets are pricing in for inflation, in the short term :

1 year inflation breakeven

Horizontal line=Zero or Inflation below Zero Deflation but notice that trend is turning higher

2 year Break even rate

2 year Break even inflation almost back above zero and this to trending higher.A very Simple look at inflation expectations if both 1 and 2 year move and stay Positive less need for negative Fed funds rate,but if these maturities stay persistently below zero=Deflation maybe the negative fed funds chatter perks back up.

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