In a surprising twist, the markets have taken a sharp turn, anticipating a dovish approach as a solution to the lingering inflation concerns. The markets just assumed a dovish U-turn in interest rates, thinking that the inflation problem is handled. The below chart features the inflation that’s expected in one year. {chart} Yes, you see it correctly. The market expects the inflation to move to about 1.31% in one year. A bit over 1% in one year… Really?! Here’s the recent CPI (YoY) reading: {chart} So, the CPI declined from above 6% to a bit above 5%, given all those rate hikes… Not below 2%, not below 3%, not below ... (full story)