Another Benign Inflation Print
From the original
There's just no way the Fed will hike with the kind of inflation readings we're getting
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Lead — The desk is increasingly concerned about rising inflation expectations following a hotter-than-expected CPI print, which has driven five-year break-even rates to their highest levels since October 2022. Per the full note [source], the 10-year break-even rate also reached 2.5%, indicating a market expectation of average annual inflation around 2.7% over the next five years. This shift in inflation sentiment is likely to pressure the Federal Reserve towards rate hikes, which could negatively impact risk assets. With oil prices surging approximately 78% year-to-date, the implications for both equities and fixed income markets are significant.