US inflation expectations, as per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, bounced off the lowest levels since September 2021 by the end of Thursday’s North American session. That said, the inflation gauge recently flashed the 2.33% mark, reversing from the previous day’s multi-month low of 2.29%.
The recently improved inflation expectations fail to defy the recession fears signaled by the inversion of the 2-year and the 10-year Treasury yield curve. That said, the US 2-year Treasury yields are higher around 3.02% while the 10-year bond coupon seesaws near 3.0% at the latest.
The upbeat prints of inflation expectations appear to weigh on the market sentiment and can help the US dollar to remain firm.
It’s worth noting that the US Dollar Index (DXY) retreated from the 20-year high the previous day, even if the daily loss was almost negligible.
Also read: Nonfarm Payrolls Preview: Three dollar-positive scenarios, only one negative one
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