DC Lite #8

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1. Inflation expectations. One-year inflation expectations increased to 4.4% from 4.2%, while those for five-year inflation rose to 3.2% from 3%, the highest since 2011. Expectations for gas (both short- and long-term) rose to the highest levels of the year.

2. Gas prices. "Wholesale gasoline futures imply greater than 10% decline from the current national average price of $3.39 per gallon. This will be part of the inflation narrative in the Nov & Dec CPI reports. This is why that one year ahead UMICH inflation expectations was so off."

3. US bond flows (II). According to BofA, flows into HY bonds were the largest since June 2020.

4. Equity fund flows. "US equity funds saw $7.66bn inflows over the past week."

5. Bull & Bear Indicator. BofA's Bull & Bear Indicator (1.7 from 1.4) is still giving a contrarian "buy signal" for risk assets.