Economics
Powell Emboldens Bond Traders to Wager Inflation Will Stay Tame
- Treasuries 10-year breakeven rate levels out at 2.15%
- Signals investors don’t see inflation much above Fed’s 2% goal
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In the wake of the Federal Reserve’s latest rate hike, bond traders are signaling they expect the U.S. economy to keep expanding without fueling a marked pickup in inflation.
A market-based gauge of the annual U.S. inflation rate for the next decade -- the 10-year breakeven rate -- has stabilized at around 2.15 percent, below a four-month high reached this week. In another debt-market indicator of dimmed inflation concern, the gap between 5- and 30-year yields is narrowing back toward the flattest levels in more than a decade.