US inflation expectations highest in 15 years

WASHINGTON. Market-implied expectations for US inflation for the next half-decade surged to the highest in 15 years yesterday amid the latest increase in commodity prices. As some US Treasury yields attained multimonth highs this week, demand for inflationprotected Treasuries has kept their yields relatively stable. The difference represents the inflation rate needed to equalise their returns.

For five-year maturities, the regular Treasury note’s yield reached 1.192 per cent Wednesday, the highest level since March 2020. The five-year TIPS yield is around -1.70 per cent, and a $19 billion sale of the securities ahead at 1pm New York time may draw a record low auction yield. The 2.86 percentage-point difference between the two rates reached yester day is the highest since 2005.