US inflation expectations recover to 2.36%, yield curve inversion prevails

US inflation expectations, as per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, rose for the second consecutive day by the end of Monday’s North American session. That said, the inflation gauge recently flashed the 2.36% mark, reversing the previous week’s losses of late.

The recovery in the long-term inflation expectations gain major should ideally help the US dollar as traders brace for this week’s Federal Open Market Committee (FOMC) meeting. However, the difference between the 2-year Treasury yields and the 10-year Treasury yields remain negative, known as the yield curve inversion, which in turn raises concerns over the US recession and challenges the USD bulls.

That said, the US 10-year Treasury yields snapped a three-day downtrend and rose nearly 1.75% while regaining the 2.81% mark of late. On the other hand, the 2-year Treasury yields marked the 3.01% figures at the latest.

It should be noted that the two US Treasury officials, namely Ben Harris, Treasury Assistant Secretary for Economic Policy and Neil Mehrotra, Deputy Assistant Secretary for Macroeconomics, recently raised hopes for a firmer US Gross Domestic Product (GDP). Earlier, US Treasury Secretary Janet Yellen talked down fears of the US recession earlier while saying, “A second quarter GDP contraction would not signal recession because of underlying job market strength, demand and other indicators of economic health.”

Also read: EURUSD price steadies above 1.0200 with eyes on US Consumer Confidence, Fed