US inflation expectations, as per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, dropped for the third consecutive day to the fresh low since late February by the end of Wednesday’s North American session. That said, the inflation gauge’s latest print is 2.54%, the same as on February 25.
The US dollar seems to bear the burden of the latest reduction in the inflation expectations as it remains pressured around 104.20 following a three-day downtrend. With this, the greenback gauge also braces for the first weekly loss in four.
It’s worth noting that Fed Chair Jerome Powell has also shown readiness for higher rates but highlighted the data-dependency for the out-of-the-box lift in the benchmark rates. The same appears to have exerted downside pressure on the US Treasury yields and allowed equities to consolidate losses.
That said, S&P 500 Futures struggle for clear directions while US 10-year Treasury yields remain pressured around the weekly low, down 2.8 basis points to 3.13% by the press time.
Looking forward, US S&P Global PMIs for June and the weekly Jobless Claims data will precede the second round of Fed Chair Jerome Powell’s Testimony will be important to watch for clear market directions.
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