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Breakevens Continue To Drift Higher

US TSYS
  • Inflation breakevens are off earlier session highs but remain historically elevated (first panel) with the largest recent increases in the shorter-dated tenors.
  • The latest increase has been smaller than on the initial invasion, in part on a smaller increase in oil prices.
  • With the ongoing sizeable compression in nominal yields (front-end and belly down 12-12.5bps on the day) this has seen a renewed sizeable easing in implied real yields (second panel), which barring the spike on the initial Russian invasion are the lowest in 10Y space since just after last month's strong US CPI print.

UST Breakevens and Real YieldsSource: Bloomberg

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