US Inflation expectations rise to five-week high ahead of PPI data

US inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, keep reflation fears on the table with its latest jump to the highest levels since January 12.

That said. inflation gauge rise to 2.48% at the latest while extending the slow grind to the north triggered since late January before flashing a three-month low.

It’s worth noting that St. Louis Fed President James Bullard reiterated his call for 100 basis points (bps) in interest rate hikes by July 1 by citing the last four inflation reports which show broadening inflationary pressures.

On the same line is the CME FedWatch Toll that suggests around 61% probabilities for a 50-75 basis points (bps) of a rate hike during the March meeting.

With this, today’s US Producer Price Index (PPI) for January, expected 9.1% YoY versus 9.7% prior, will be important for short-term market moves.