follow up Previous post Regarding the expected market reaction to Manchin, put together all the betting odds on the size of the settlement plan and the impact on implied expected inflation, real interest rates, and future economic activity. I plotted a 7-day frequency to include odds from PredictIt, which will not stay the same over the weekend.
Figure 1, the top panel: The five-year inflation break-even is calculated as the five-year treasury bond yield minus the five-year TIPS yield,% (sky blue, left scale), 7/1 is the sum of the settlement contract prices exceeding $0.6 trillion (tan, right scale) . Middle panel: Five-year TIPS yield,% (sky blue, left scale), 7/1, the sum of the settlement contract prices exceeding $0.6 trillion (tan, right scale). Bottom panel: The ten-year and three-month Treasury bond maturity spread (sky blue, left scale), and the total contract price of the reconciliation plan exceeds 7/1, which is more than 0.6 trillion U.S. dollars (tan, right scale). The PredictIt contract price is at the end of the day. Source: FRB through FRED, Predict it 12/23 visit.
