Thursday , January 27 2022
Home / Econbrowser - James Hamilton / More on Market Indicators pre- & post-Manchin

More on Market Indicators pre- & post-Manchin

Summary:
Following up on the previous post on expectations responses from the market to Manchin, Just putting together all the pieces of betting odds on the size of the reconciliation package, and the impact on implied expected inflation, real rates, and future economic activity. I plot on a 7 day frequency so as to include the odds from PredictIt, which do not stay constant over the weekend. Figure 1, Top Panel: Five year inflation breakeven calculated as five year Treasury yield minus five year TIPS yield, % (sky blue, left scale), sum of contract prices for reconciliation package passed by 7/1 in excess of %excerpt%.6 trillion (tan, right scale). Middle Panel: Five year TIPS yields, % (sky blue, left scale), sum of contract prices for reconciliation package passed by 7/1 in excess of %excerpt%.6 trillion

Topics:
Menzie Chinn considers the following as important: ,

This could be interesting, too:

John H. Cochrane writes Fed Nominees

John H. Cochrane writes Fiscal Inflation.

John H. Cochrane writes The Ghost of Christmas Inflation

John H. Cochrane writes Fiscal theory update

Following up on the previous post on expectations responses from the market to Manchin, Just putting together all the pieces of betting odds on the size of the reconciliation package, and the impact on implied expected inflation, real rates, and future economic activity. I plot on a 7 day frequency so as to include the odds from PredictIt, which do not stay constant over the weekend.

More on Market Indicators pre- & post-Manchin

Figure 1, Top Panel: Five year inflation breakeven calculated as five year Treasury yield minus five year TIPS yield, % (sky blue, left scale), sum of contract prices for reconciliation package passed by 7/1 in excess of $0.6 trillion (tan, right scale). Middle Panel: Five year TIPS yields, % (sky blue, left scale), sum of contract prices for reconciliation package passed by 7/1 in excess of $0.6 trillion (tan, right scale). Bottom Panel: Ten year-three month Treasury term spread (sky blue, left scale), sum of contract prices for reconciliation package passed by 7/1 in excess of $0.6 trillion (tan, right scale). PredictIt contract prices at end-of-day. Source: FRB via FRED, PredictIt accessed 12/23.

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

Leave a Reply

Your email address will not be published. Required fields are marked *