US inflation expectations jump to two-month high, US Core PCE data eyed


US inflation expectations, as measured by the 10-year breakeven inflation rate, per the St. Louis Federal Reserve (FRED) data, rallied to the fresh high since June 02 while flashing a 2.43% mark on Thursday.

In doing so, the risk barometer rejected the early week’s pullback while extending the recovery moves from July 19.

The run-up in inflation expectations could be linked to the US Q2 GDP data that recently justified the Fed’s cautious approach before announcing the taper. The first reading of the second-quarter growth figures eased below 8.5% market consensus to 6.5% QoQ, versus 6.4% prior. However, the consumer spending details remain robust and suggest economic recovery. In addition to the GDP, upbeat weekly Jobless Claims and further softening of the housing data also convinced market players of further easy-money policies from the Fed.

It should be noted, however, that the coronavirus woes and the US data may tax the inflation expectations going forward, by way of weighing on the market’s sentiment.

That said, the US 10-year Treasury yields followed the inflation expectations to the north the previous day before recently consolidating gains around 1.25%, down 1.8 basis points (bps).

Although the Fed seems firm in its tapering commitments, today’s Core Personal Consumption Expenditure Price Index for June will be the key after the latest easing of GDP and housing figures.

Read: US Core Personal Consumption Expenditure Price Index June Preview: Bad will not be bad enough

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD battles with 1.1700 as the market mood turns sour

Poor German data and renewed concerns about a default of the Chinese Evergrande property giant undermined investors’ sentiment, pushing them into the dollar’s safety.

EUR/USD News

GBP/USD accelerates its slump, trades around 1.3650

GBP/USD is under strong selling pressure, trimming most of its post-BOE gains. Concerns about the global financial health and slow moves towards tapering weigh on markets.

GBP/USD News

XAU/USD hangs near multi-week lows, around $1,745 ahead of Powell

Gold struggled to capitalize on its attempted intraday recovery move. Hawkish Fed/BoE, rising bond yields acted as a headwind for the metal. Resurgent USD demand exerted additional pressure on the commodity.

Gold News

PBoC imposes ban on crypto trading as it fosters ‘illegal financial activity’

PBoC bans crypto trading activities and a plethora of associated services, labeling it “illegal.” Overseas cryptocurrency exchanges providing services to Chinese residents will be investigated in accordance with the law. 

Read more

Evergrande, VIX and yields make for choppy day ahead

Equity markets remain focused on Evergrande as rumours of a possible default on overseas debt swirl. The market appears to be on the hunt for negative news, which leads us to conclude that stocks are going lower in the short term.

Read more

Forex MAJORS

Cryptocurrencies

Signatures