US inflation expectations fade bounce off monthly low

US inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, reverse the U-turn from monthly low of 2.27%, marked last week. In doing so, the risk barometer eased from 2.35% to 2.33% by the end of Thursday’s North American session.

The receding inflation expectations join recently downbeat US data to push back the odds of the Fed’s tapering. However, the latest Fedspeak has been hawkish and weighs on the risk appetite.

Topping all is Dallas Fed President Robert Kaplan who said, “Fed's asset purchases had their purpose and their time but not longer well-suited to the situation.” James Bullard and Ester George were the rest of the non-voting Fed members who followed Kaplan and firmed up concerns over tapering.

It’s worth mentioning that the virus woes and geopolitics challenge the market’s sentiment, also joined by the cautious mood ahead of Fed Chair Jerome Powell’s Jackson Hole Symposium speech.

While portraying the mood, S&P 500 Futures print mild losses, tracking the Wall Street benchmarks, whereas the US 10-year Treasury yields remain pressured around 1.34% at the latest.

Moving on, the US Core PCE Price Index for July will join the risk catalysts to entertain gold traders. However, major attention will be on how Powell defends the Fed’s easy money policies.

Read: Fed Chair Powell’s Jackson Hole Speech: Caution will win out