Bond Market Inflation Gauge Pressured Over Trump Tariff Turmoil
- Five-year breakeven rate rises above the 30-year gauge
- Demand for near-term inflation hedge rises amid tariff concern
On Sunday, the US president said that he plans to levy 25% tariffs on all US imports of steel and aluminum without saying when.
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Bond investors are betting that the Federal Reserve will have to contend with rising prices once again, and soon, in the wake of President Donald Trump’s plan to slap tariffs on trading partners and some industrial sectors.
Short-term inflation expectations are rising above longer-term ones for the widest gap in two years. The so-called five-year breakeven rate, which tracks the yield differences between Treasuries and inflation-linked bonds, reached 2.64% Monday, 27 basis points higher than the 30-year gauge, and marking the biggest difference between the two since 2023.