Surging inflation caught many traders off guard over the past two years. Now Wall Street’s projections on rising prices appear to be more on the mark.
March and April marked the first time over the last two years when the actual inflation rate was lower than what traders expected it to be 12 months earlier, based on the consumer-price index swaps that Wall Street uses to bet on future inflation.
That said, there’s still a risk that traders underestimated inflation’s path in coming months. A year ago, they bet that inflation will fall into the 2% range by September. That would be a significant decline from the 5% rate recorded in April.