US inflation expectations track higher yields to refresh monthly top above 2.50%

US inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, refreshed monthly high to 2.53% by the end of Thursday’s North American session, per the FRED website.

The firmer inflation expectations keep fears of the Fed’s early rate hike on the table, which also takes clues from the recently higher US Treasury yields.

US 10-year Treasury yields rallied the most in three weeks the previous day, firmer around 1.55% at the latest, after an auction of the US seven-week Treasury bond showed disappointing demand for the government securities during the holiday period. “The seven-year notes sold at a high yield of 1.48%, around two basis points higher than where they had traded before the auction,” said Reuters.

It’s worth noting that the strong yields failed to propel DXY, pressured around a monthly low near 95.90.

Read: US Dollar Index stays pressured around monthly low under 96.00 amid firmer yields, covid woes