Treasury Spread Shows No Signs of Inflation

The spread between nominal 10-year treasuries (data) and 10-year TIPS (data) has increased slightly over the last few months, to the current level of 233 basis points as of April 9. But the current spread is still below the 250 basis point average during 2004, 2005, 2006, 2007 and the first half of 2008. This market-based indicator of expected inflation is a little higher than the 1.9% consensus of the WSJ forecasters. At least by this Treasury bond-market derived estimate of future inflation, there don’t appear to be any inflationary pressures building.

About Mark J. Perry 262 Articles

Affiliation: University of Michigan

Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.

He holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University in Washington, D.C. and an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota.

Since 1997, Professor Perry has been a member of the Board of Scholars for the Mackinac Center for Public Policy, a nonpartisan research and public policy institute in Michigan.

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