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Inflation Expectations Largely Brush Off Oil Price Fall

US
  • Whilst the rise in market inflation expectations since the war in Ukraine has been partly attributed to surging oil prices, there has been relatively little reaction to oil sliding over the past two days.
  • This is particularly so for the 5Y breakeven (white line in chart), at 3.49% from yesterday’s high of 3.55%.
  • 5Y5Y inflation swaps (yellow line) have seen a slightly larger dip, 2.68% from 2.76%, but remain far above the 2.3-2.4% seen consistent with the Fed’s 2% inflation target.

Source: Bloomberg

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