US 10-year inflation expectations rise to nine-week high

US inflation expectations, as per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, rose for the fourth consecutive day at the latest as bulls prepare for this week’s Jackson Hole Symposium.

That said, the inflation precursor marched to 2.57% at the latest, after crossing July’s high on Friday.

The jump in the US inflation expectations could be linked to the increased expectations of the Fed’s aggression. “Fed funds futures on Monday have priced in a 54.5% chance of a 50 basis-point (bp) rate hike at the Fed's policy meeting next month. The fed funds rate is seen hitting roughly 3.6% by the end of the year, with a peak rate of nearly 3.8% in March 2023,” said Reuters.

Given the fears of recession dominating the market sentiment, the higher inflation and increasing odds of the Fed’s aggression weigh on the risk appetite. The same fueled the US 10-year Treasury yields to a fresh monthly high of around 3.02% while Wall Street closed in the red on Monday.

Amid these plays, the US dollar cheers the safe-haven appeal as it dropped to the fresh 20-year low versus its European counterpart the previous day.

Also read: EUR/USD dribbles at multi-year low near 0.9950 amid recession fears, focus on EU/US PMIs