S&P 500 vs. Expected Inflation
This chart looks at the SPX and 10 year inflation expectations since August 1998. The market seems to be finally hitting a patch; VIX yesterday rose again above 30 vols level and SPX has been losing momentum
As shown in the chart the rally seems to be driven by inflation. The 10 year breakeven rate which dropped below zero on November 20th due to deflation concern has surged to 1.7%. The surge in inflation expectation was followed by the current rally which is primarily due to pump-priming by the central banks