Stocks and bonds have been buoyed by expectations that price increases will cool quickly.
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Behind this year’s improved start for markets lies a broad wager that inflation will soon post a once-in-a-generation decline.
Market-based gauges of inflation expectations project the annual pace of rising prices will tumble in the months ahead roughly as fast as during the recession that followed the 2008 financial crisis—or when Fed Chairman Paul Volcker used double-digit interest rates to crush the soaring inflation of the late 1970s.
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