US inflation expectations extend recovery from monthly low

According to the St. Louis Federal Reserve data, the US inflation expectations, as measured by the 10-year breakeven inflation rate, stretched Thursday’s rebound from a monthly low to 2.44% by the end of Monday’s North American trading session.

The sentiment gauge jumped to the highest since April 2013 during early May before stepping back from 2.54%.

Although inflation expectations have marked a steady run-up, fueling the reflation fear, commodities and equity futures have been upbeat of late. The reason could be traced from the mixed comments from the US Federal Reserve officials.

Recently, St. Louis Fed President James Bullard noted he expects to see more inflation but added that it would mostly be temporary.

Considering the recently strong US economics supporting the tapering talks, market players will keep eyes on the US inflation expectations ahead of Friday’s US Core PCE Inflation figures, the Fed’s preferred gauge, for fresh impulse.

Read: Forex Today: Dollar remains pressure, catalysts missing