Asset Prices, Economy Are Disconnected: Morgan Stanley

The video discusses the current state of yields, focusing on why they aren't rising despite improving economic data. It highlights the role of the Fed's asset purchases in keeping nominal yields low and emphasizes the importance of real yields. The discussion also covers the impact of fiscal stimulus on asset prices and the disconnect between asset prices and economic fundamentals. Additionally, it examines inflation indicators, noting that market-based signals suggest rising inflation, which is more technical than fundamental due to ongoing demand destruction and high unemployment.

Why might economists not be forecasting significant inflation despite market indicators suggesting otherwise?

In what way does quantitative easing affect the relationship between nominal yields and inflation expectations?