Thursday, December 8, 2016
US inflation expectations.
The arrival of a president from outside the political mainstream brings with it the possibility of a change in economic policy, sentiment and behaviour. President-elect Donald Trump’s programme is expected to be inflationary and the ten-year break-even inflation rate (derived from comparing 10-year US Treasuries with their inflation-protected counterparts) hit 1.97% on December 1, the highest since September 2014, and has remained high since then. This represents a 20-basis-point jump since the November 8 election. The Federal Reserve (Fed) is widely expected to raise rates for the first time in a year at its December 14 meeting.