US inflation expectations stay firmer as markets brace for US CPI

Market sentiment remains sour during early Monday as the US-China jitters over the “unidentified objects” join the mixed Fed talks and cautious mood ahead of the key US Consumer Price Index (CPI). While the geopolitics and Fed concerns are mixed, the trend from inflation precursors appears to favor the US Dollar’s safe-haven demand.

That said, the US inflation expectations per the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED) remain firmer around the monthly highs marked in the last week.

10-year inflation expectations per the aforementioned measure remained sidelined near 2.33% by the end of Friday’s North American trading session, after refreshing a two-month high to 2.34% on Wednesday.

On the same line, the five-year US inflation expectations rose to a fresh high since December 05, to 2.47% at the latest.

It should be noted that an upward revision to the US CPI data for December and the recently firmer US inflation expectations keep the US Dollar buyers hopeful ahead of Tuesday’s key inflation numbers.

Also read: US Dollar Index grinds higher past 103.50 as US inflation looms amid mixed Fed concerns