US bond market’s inflation gauge hits 6-month high


The market-based measures of US inflation expectations hovered nearly six-month highs on Monday. Inflation expectations were bolstered last week by data showing higher producer and consumer prices in July, according to Reuters News

The spread between the 10-year Treasury inflation-protected security and regular 10-year bond, also known as the 10-year breakeven inflation rate, was 1.66% on Monday, having hit a high of 1.67% last week. That was the highest level since Feb. 6, according to data source St. Louis Federal Reserve. 

Inflation expectations dropped to 0.5% in March after stock markets collapsed on coronavirus pandemic, triggering deflation worries. However, the decline from 1.4% to 0.5% was quickly reversed as the Federal Reserve and other major central banks launched unprecedented liquidity-boosting initiatives to counter the recession/deflation fears. 

The breakeven rate stood at 1.55% at the end of July and recently received a boost from an above-forecast US consumer price index data. 

While inflation expectations have improved, they still remain significantly lower than the Fed’s 2% price target. As such, the recent uptick is unlikely to influence the Fed’s ultra-accommodative monetary policy stance. Besides, speculation is rife that the central bank may soon signal greater tolerance for above-target inflation.

10-year breakeven rate 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD holds above 1.17, shrugging off upbeat US consumer confidence

EUR/USD is trading above 1.17, holding its gains despite upbeat US data. The CB Consumer Confidence jumped to 101.8 points, beating estimates. Fed speakers are awaited and the presidential debate is eyed.

EUR/USD News

GBP/USD retreats from highs amid Brexit, coronavirus uncertainty

GBP/USD is retreating from the highs close to 1.29 as concerns about Brexit talks and rising UK coronavirus cases are taking their toll on the pound. 

GBP/USD News

XAU/USD holds steady near multi-day tops, around $1890 region

Gold built on the previous day's goodish bounce from 100-day SMA and edged higher through the first half of the trading action on Tuesday. The overnight sustained move beyond 100-hour SMA was seen as a key trigger for bullish traders and pushed the commodity to multi-day tops.

Gold News

Presidential Debate Preview: Trump may lose due to his own buildup, market implications

The first presidential debate is set to shake up the elections campaign.  President Trump's playing down of challenger Biden's skills may turn into a double-edged sword. Markets will move on implications for a new fiscal relief package. 

Read more

WTI drops to fresh lows near $39.70 ahead of API

Prices of the American benchmark for the sweet light crude oil broke below the $40.00 mark per barrel and slipped back to the $39.70 region on Tuesday.

Oil News

Forex MAJORS

Cryptocurrencies

Signatures