US inflation expectations recover ahead of employment data

US inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, snapped a six-day downtrend by the end of Thursday’s North American session, per the data source Reuters.

In doing so, the inflation gauge bounced off the 10-week low flashed the previous day to print 2.47% at the latest.

The uptick in the US inflation expectations could be linked to the hawkish Fedspeak and optimism over the US policymakers’ ability to avoid a government shutdown, which has a deadline of Saturday.

Adding strength to the momentum were firmer US job-related data and recent optimism over Omicron treatment after the UK approves clinical trials for the drug that is a likely solution.

However, spreading cases of the South African covid variant in the US and cautious mood ahead of the US Nonfarm Payrolls (NFP), as well as US ISM Services PMI, challenges the market optimism.

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