Inflation expectations cooling, not collapsing.
Michigan survey shows 1-year at 4.3% (down from 4.7%), 5-10 year at 3.4% (down from 3.5%). Small moves, but the direction matters.
People aren't panicking about prices anymore. They're not celebrating either. Just... adjusting. That's often how sentiment shifts work—quietly, then all at once.
The Fed watches this closely. Not because it predicts actual inflation, but because expectations can become self-fulfilling. If people think prices will rise forever, they spend now, borrow more, demand raises. The spiral feeds itself.
Right now? The spiral is unwinding. Slowly.
Don't expect fireworks. Expect a long, boring grind back toward something that feels normal. Markets hate uncertainty. They can live with 3-4% inflation if it's stable and predictable.
The real question: does this give central banks room to ease, or are they still fighting the last war?
Michigan survey shows 1-year at 4.3% (down from 4.7%), 5-10 year at 3.4% (down from 3.5%). Small moves, but the direction matters.
People aren't panicking about prices anymore. They're not celebrating either. Just... adjusting. That's often how sentiment shifts work—quietly, then all at once.
The Fed watches this closely. Not because it predicts actual inflation, but because expectations can become self-fulfilling. If people think prices will rise forever, they spend now, borrow more, demand raises. The spiral feeds itself.
Right now? The spiral is unwinding. Slowly.
Don't expect fireworks. Expect a long, boring grind back toward something that feels normal. Markets hate uncertainty. They can live with 3-4% inflation if it's stable and predictable.
The real question: does this give central banks room to ease, or are they still fighting the last war?