It was another rather boring day, with the S&P 500 finishing basically flat down 8 bps. The NASDAQ 100 had the better day, with the Invesco QQQ Trust (NASDAQ:QQQ)s rising by roughly 30 bps.
Breakeven inflation rates fell again on Monday to 2.39%, on the 10-year. The 10-year TIPS was up 3.4 bps to -84 bps. So it appears that for now, we continue to see downward pressure on inflation expectations. This may only accelerate depending on how the CPI comes in later this week.
It isn’t so much that rates are falling; nominal rates have flatlined, and TIP rates are steadily increasing. It is, to some degree, taking away some of those artificially high inflation expectations because TIP rates failed to participate with nominal rates for most of the spring.
Again, I do not think it is by chance that the S&P 500 has stalled out in recent weeks, as inflation expectations have not only peaked, but appear to be giving back some of their gains.
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