US inflation expectations retreat ahead of US CPI

US inflation expectations remained pressured on Wednesday as yields retreated ahead of Thursday’s key Consumer Price Index (CPI) data for September.

That said, the inflation precursors, as per the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, retreated from the recent one-week highs of 2.31% and 2.36% respectively to 2.32% and 2.29% in that order.

It should be noted, however, that the inflation expectations remain well beyond the multi-month low marked during late September, which in turn justifies the latest hawkish Fedspeak and the Federal Open Market Committee (FOMC) Meeting Minutes.

Even so, a retreat in the US inflation expectations and yields challenge the US Dollar Index (DXY) which extends the previous day’s pullback from the two-week top to 113.17 by the press time.

Also read: US Dollar Index struggles to justify hawkish Fedspeak, FOMC Minutes ahead of US CPI