The green line is the year-over-year (YOY) inflation expectation for Germany over the next 10 years, and the white line is the inflation expectation for the U.S.
The market is pricing inflation in Germany for the next 10 years at 0.76% YOY, the lowest inflation rate in history. What a change from the hyperinflation of the Weimar Republic between 1921 and 1924! In U.S., even with strong economic data (very strong retail sales this week, let alone the 321k NFP last Friday), there is still no sign of inflation.
Key takeaway: With oil dropping, commodity prices down across the board, and no wage pressure in sight, are we entering into a deflationary decade?
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