Several widely-watched gauges of US inflation expectations have climbed to their highest levels this year, as oil prices regain their footing and some investors bet that the Federal Reserve will be slow in quelling any price pressures.
The US 10-year “breakeven” rate measures the market’s expectations of average inflation over that time by comparing the yields of conventional US Treasuries maturing in 10 years and Treasury Inflation Protected Securities, or Tips.
The 10-year breakeven has shot up from a low of 1.53 per cent in mid-January to 1.92 per cent on Monday, the highest since November 2014. The five-year breakeven rate has risen to 1.71 per cent, the highest since September, while the two-year is at its highest since July 2014.