Bond Traders Bet on Recession-Level Inflation Plunge Next Year

WATCH: Former US Treasury Secretary Lawrence Summers previews the upcoming Federal Reserve meeting.Source: Bloomberg
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If the bond market is correct, US inflation is about to plummet at the pace that it did during the 2008-2009 global financial crisis.

The gap between yields on one-year Treasury Inflation-Protected Securities and similar-dated nominal government notes stands at 2.18%, reflecting market expectations for the average inflation rate over the coming year. That would require price gains to slow by more than 5 percentage points, a pace seen in only three instances in the past six decades.