US inflation expectations hit 10-month low

The long-term inflation expectations in the US fell to a 10-month low, after the oil prices fell into the bear market territory.

The 10-year breakeven rate (difference between the US 10-year treasury yield and 10-year treasury inflation protected securities) fell to 1.66%; the lowest level since October 24.

The yield curve could continue to flatten given the drop in the long-run inflation expectations. The difference between the 10-year treasury yield and the 2-year treasury yield) fell back to 80 basis points and could drop further in the short-run.