Expectations metamorphosis – 2

One month ago I showed this chart (expectations from the Cleveland Fed):

Then this chart:

And wrote:

After falling continuously, the short end of the inflation expectations curve “jumps” after June, with the long end remaining subdued. This transformation may be reflecting the chatter over the summer on the likelihood of “additional Fed action”.

I´m now curious to see the “mutation” which will show up next month. If the commitment pledged at the last FOMC meeting is believed, we should see the long end of the inflation expectations curve shift up, with the whole curve once more resembling a “Nike logo”, only at a higher level relative to the older ones.

But this is what transpired:

Inflation expectations fell for all horizons! That´s a bad omen for the success of QE3. The 5 year expected inflation from the TIPS spread is not very encouraging either:

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