Bond Traders About to See If They're Underrating Inflation Risks

Market’s inflation expectations close to lowest since January
But Morgan Stanley, SocGen see price pressures building

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S.Photographer: Michael Nagle/Bloomberg

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By Katie Greifeld and Sho Chandra

November 12, 2018 at 1:52 PM UTC

Updated on

November 12, 2018 at 7:51 PM UTC

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A debate is breaking out in the Treasury market before Wednesday’s release of U.S. consumer-price data as tumbling crude oil leads investors to ratchet back inflation expectations.

In one camp, you have the likes of Societe Generale SA. The bank sees price pressures building into 2019, fueling demand for inflation protection, in part as investors anticipate more U.S. tariffs on Chinese goods. Morgan Stanley agrees, saying the import levies and job-market strength should pressure consumer prices higher next year.