Economics
U.K. Inflation Breakevens Flag a Tough Outcome From Brexit Talks
- Five-year rates have climbed amid hiccup in negotiations
- Breakevens foretold a Tory victory ahead of election last year
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Inflation breakeven rates in the U.K. haven’t rallied this hard since the end of 2016. They may be pricing an adverse outcome in the Brexit trade talks.
The five-year breakeven rate has surged 43 basis points this quarter to 2.93%, putting it above the past year’s average. That is at odds with the pound, which -- despite its recent correction -- strengthened considerably since the end of June.