Five-year break-even rates hit 2.7%, the highest since October 2022, as markets price in persistent inflation pressures.
US inflation expectations climbed sharply after Tuesday’s consumer price index report, with the five-year break-even rate reaching 2.7%, its highest level since October 2022. The 10-year break-even rate rose to 2.5%, the peak since 2023, driven by surging oil prices linked to geopolitical tensions.
The data reinforced concerns that inflation may remain elevated, with oil prices jumping 4.2% to $102 a barrel, extending a 78% year-to-date gain. Equities retreated, with the Nasdaq down less than 1% and the S&P 500 falling under 0.5%, while the 10-year Treasury yield settled at 4.462%, its highest since July.
Analysts warned that rising inflation expectations could push the Federal Reserve toward further rate hikes, though break-even rates remain below levels likely to trigger immediate policy shifts.