Persistent Disconnects

One of the more remarkable anomalies in a year full of them was the persistent disconnect in 2022 between benchmark US yields and inflation outcomes. Long story short, yields should've been higher. And they still should be, based on their historical relationship with the 12-month rate of headline price growth. The scatterplot below is very simple. In the era of experimental monetary accommodation, assessing fair value for bonds was anything but. Inflation was very low, so yields were too, but