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Treasury Traders Are Betting Omicron Will Add to Inflation Spike

  • U.S. 10-year break-even rate climbs to highest since November
  • U.K. rate hovers close to a three-month low at just below 4%
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Complacency Around Omicron Is Key Risk for Markets: Bell
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Treasury traders are betting the rapid spread of the omicron variant will increase inflationary pressures in the U.S. economy, rather than weaken them.

U.S. 10-year break-even rates -- which are market estimates for the average rate of inflation over the next decade -- climbed to as high as 2.66% on Tuesday, the most since November, and up from as low as 2.36% on Dec. 14. The extra yield on Treasury 10-year notes over two-year securities has also jumped this week, indicating the bias may be switching back to a steeper yield curve.