U.S. Price Data Take Wind Out of Inflation Bond Market's Sails
- Breakevens fall despite unsurprising Consumer Price Index
- Move coincides with growing doubts about Fed rate hike path
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Bond traders in the markets for U.S. inflation protection appear to have seen something deflating in the latest price data.
Thursday’s U.S. Consumer Price Index report looked harmless enough -- the readings for both headline and core inflation for the 12 months through June were bang on target at 2.9 percent and 2.3 percent, respectively. Nevertheless, the cost of inflation protection dropped notably in the wake of the report. Premiums fell across the breakeven curve, shaving almost 8 basis points off the one-year rate.