Skip to content

Short-Term Inflation Expectations Drop Like a Rock

Written by

MikeMcD82

Rampant risk aversion, receding energy prices, and a USD rally have led to significant steepening in the short-end of the U.S. breakeven curve, with the potential for more to come ahead of next week’s CPI release (see chart).  So long as risks in Europe continue to escalate and CPI growth comes in at or below consensus on 5/19 the market could see further steepening in the breakeven curve as near-term inflation expectations continue to moderate.  The bottom line here is that if this trend continues inflation hawks may once again take a back seat, while deflation rhetoric creeps its way back into the market. 

 Breakeven Curve:

Source: Bloomberg

Previous article

Retail Sales Just Ain’t What They Used To Be:

Next article

Swiss Franc: A Managed Currency?

Join the discussion

Leave a Reply

Your email address will not be published. Required fields are marked *