US inflation expectations stabilize around 2.75% ahead of US CPI

US inflation expectations, as per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, take round to the monthly high surrounding 2.76%, steady around 2.75% in the last two days by the end of Thursday’s North American session.

Despite the steady inflation signals from the FRED data, markets fear a higher number from the US Consumer Price Index (CPI) release for May, up for publishing later on Friday, which in turn weigh on the market’s sentiment and underpin the US dollar’s safe-haven demand.

That said, the chatters surrounding strong inflation to weigh on growth and the White House’s fear of stronger CPI data add to the market’s risk-off mood.

The sour sentiment could be witnessed via the biggest daily slump in the Wall Street benchmarks for the week whereas the US 10-year Treasury yields also refreshed their monthly high before retreating to 3.04%. The US Dollar Index (DXY) also rallied the most in a week while cheering the greenback’s safe-haven status.

It’s worth noting, however, that the headlines US CPI is expected to remain unchanged near 8.3% YoY while the CPI ex Food & Energy, known as Core CPI, may soften to 5.9% from 6.2%.

Also read: US Consumer Price Index May Preview: Fed policy is set but there is room for surprise