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Market Inflation Expectations Moving Higher

US
  • Inflation breakeven measures have edged back closer to recent highs today with the 10Y at 2.96% (high 3.00%) and the 5Y5Y forward at 2.41% (high 2.46%).
  • The 5Y5Y inflation swap has also increased but remains further off highs at 2.63% vs 2.77%.
  • Despite these elevated levels, a number of FOMC members this week have continued to see inflation expectations as being anchored, but will no doubt watch closely for any further supply side disruption from the war in Ukraine and Chinese Covid restrictions.

10Y breakeven (white), 5Y5Y breakeven (yellow) and 5Y5Y inflation swap (green)Source: Bloomberg

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