Bond Market Is Signaling Inflation Uptick, Then Flatline: Chart

Bond-market inflation gauges show U.S. inflation may pick up in the near-term, while sustained price acceleration looks unlikely: Five-year and 10-year break-evens, reflecting yields on nominal Treasuries and equivalent Treasury Inflation-Protected Securities, are almost equal for the first time since 2008. Rebounding oil prices have boosted the shorter-term inflation outlook, while forecasts for sluggish global economic growth weigh on longer-term price trends. “The underlying theme is deep-seated pessimism that the global economy will really achieve this robustness it’s missing,” said Aaron Kohli, a fixed-income strategist in New York at BMO Capital Markets.

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