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Market 5Y Inflation Expectations Holding Above Pre-Pandemic Levels

US
  • Checking in with US inflation breakevens, both the 5Y and 5Y5Y remain at relatively stable levels but the two have seen an unusual disconnect over the past week, with the 5Y rising as the 5Y5Y rolls over.
  • Richmond Fed's Barkin has noted in recent weeks that inflation expectations are back at historical levels (broadly echoed by NY Fed’s Williams seeing them still well-anchored) and indeed the 5Y5Y forward at 2.23% is at levels last seen in 2018.
  • The 5Y at 2.415% does however remain above levels from years shortly preceding the pandemic, at levels last seen in 2013.


5Y breakeven (white), 5Y5Y breakeven (yellow)Source: Bloomberg

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