Real rates the latest inflation worry
Markets divided on inflation
Either inflation is coming, or it isn't. Either way some markets are going to be roiled.
That's because some markets are pricing in inflation while others are braced for more of the same. That divergence is destined to break.
Bloomberg's Sid Verma writes about it today, citing Deutsche Bank analysts who use the b-word.
"We see real rates as extremely misvalued if not in a bubble," wrote Deutsche Bank analysts, led by Chief Global Strategist Binky Chadha.
If you believe in higher inflation, then it's Treasuries that are off the market. Five-year yields are at 1.99% and that's below what TIPS imply as a zero return.
They expect yields to snap higher on rising inflation.