Not-So-Great Expectations

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I was terribly interested in this article posted over at ZeroHedge, which described at some length that, as obsessed as the media is with the inverted yield curve, there was actually a far more effective “predictor” of future economic ups and downs in the form of the “forward” 3 month rate.

I’ve done some digging, and I haven’t found it in SlopeCharts, but I did stumbled upon an interesting 5 year version of this, which effectively predicts forthcoming inflation rates. As you can plainly see, it went into an absolute free-fall during the 2008 financial crisis (symbol is FR:T5YIFR)

slopechart FR T YIFR

What I find particularly striking is that gorgeous head and shoulders pattern, denoted with the neckline I’ve provided. What this implies is a free-fall in inflation measurement, commensurate with an economy circling the toilet.