Citigroup points out that the market underestimates future inflation in the United States and may need to adjust expectations

Citigroup interest rate trading strategist Benjamin Wiltshire stated in an interview with Bloomberg that the market underestimates future inflation in the United States, and investors may not fully recognize the resilience of American consumers. The market may need to adjust its expectations for inflation. He pointed out that the market seems to be firmly believing that inflation will decline, but the U.S. is still in a structurally high inflation environment.

He believes that this situation makes inflation-linked trading more attractive and recommends buying five-year inflation forward contracts, arguing that its pricing of about 2.5% is too low, below the sustained core inflation in the U.S. of slightly below 3%