(Bloomberg) – Bond traders have cut their inflation expectations, putting the so-called equilibrium rate on Treasuries tied to gains in consumer prices over the next five years on track for its biggest drop in a week. since the first months of the covid pandemic.
Concern over the new omicron variant has been combined with a harsh twist from the head of the US central bank, Jerome Powell, to quell inflationary fears, although the expected rate of profit still remains substantially above the target of the Federal Reserve of about 2%. A drop in oil prices on Thursday could also add downward pressure to the inflation outlook.
The Treasury’s five-year equilibrium rate was around 2.71% in New York trading on Thursday, down from 2.95% at the end of last week and a peak of more than 3.25% for the month. last.
What has happened so far this week is similar in scale to what happened in mid-April 2020, although it is less than half the size of a drop since mid-March 2020 when initial concerns about covid they shook the markets.
Bond Traders Cut Inflation Outlook by Most Since Early Pandemic
(Corrects reference to peak moment in third paragraph)