Seems like its easy to say that inflation is back and interest rates have to rise. Below looks at the Inflation Indicator (TIP/TLT) and how it is experiencing a key test of resistance at this time.
The TIP/TLT ratio reflects that the trend has been lower inside of falling channel (1) since the highs back in 2011. The ratio hit the top of the falling channel earlier this year at (2) and was unable to break out. After hitting the top of the falling channel at (2), the ratio has turned lower and has traded sideways the past few months.
The ratio is now testing the top of its short-term trading range at (3), where a key resistance test is in play. If resistance would hold at (3), it would suggest another short-term peak in inflation is taking place and it could send a short-term positive message to government bonds, that have been hit hard of late.
For inflation to become an issue, it needs to break out of resistance at (3) and break above falling channel (2).