A big economic story this year has been "Abenomics", Japan's effort to get out of its multi-decade deflationary slump using a combo of monetary policy, fiscal stimulus, and structural reforms.

We already know it's produced extraordinary movements in the yen (down big) and the stock market (the Nikkei has surged) but the question remains whether it will have a lasting, positive effect on the real economy.

Jeff Sommer at NYT has a piece on the signs that Abenomics is working.

One chart that is positive is this one, which shows 'Breakeven Inflation Rates' which simply uses bond prices to come up with a market-based prediction of where inflation will be in 2 years.

Says Sommer, the increase in the orange line is a sign that inflation is expected to arrive, as the Bank of Japan hopes:

Is the new monetary policy working? It hasn’t been in place long, and no up-to-date inflation data is yet in hand. The latest government figures show that in March, Japan’s consumer price index fell 0.5 percent, annualized, a deflationary reading. But Japan’s bond prices imply that expectations for inflation two years from now have already jumped to well above 1.6 percent.

“It’s not quantifiable yet, but the psyche of the Japanese consumer may actually be changing,” said Taizo Ishida, lead manager of the Matthews Japan fund, a stock mutual fund for American investors. “Anecdotally, you can feel it,” he said. “People are beginning to put money into equity mutual funds in Japan, and consumers are buying luxury goods. But we’ll have to see where this ends up.”