The Bond Market Is Wrong. Inflation Will Return, Someday.

The bond market thinks central banks are out of juice and inflation will stay below target for, well, ever. The longest-dated Treasurys are priced for inflation to average 1.6% for the next 30 years, and German bonds for just 1.3% inflation. Both are testing the lows of 2016, when the oil price crashed and investors feared deflation.

To believe inflation will stay very low for a very long time requires believing both that the Fed and other central banks really are running on empty and that governments won’t offer fiscal help…

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