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Short-Term Inflation Expectations Fall, Long-Term Steady

US
  • The 5Y inflation breakeven has been trimmed to 3.41%, from a combination of a sizeable increase in real yields after the solid payrolls report and with oil lower over the past two days.
  • 5Y5Y inflation swaps meanwhile show relatively little impact, hovering at 2.65% as they remain elevated but without signs of de-anchoring.
  • The latest manufacturing surveys for March have been mixed. The S&P Global PMI showed the incidence of supply chain bottleneck delays as the lowest since Jan’21 and with moderating price pressures, yet the ISM saw hampered output and new orders, a sharp increase in prices and electrical components facing the eighteenth consecutive month of short supply.

5Y breakeven (white), 5Y5Y inflation swap (yellow) and WTI 1st contract (green)Source: Bloomberg

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