• Another day of risk-on sees inflation breakevens continue yesterday’s rise, albeit at a slower pace, which has seen the 5Y5Y up 10bps from Thursday’s low to 2.26% but still only back to levels from late last week.
• The trend is still solidly downwards and has helped ease concerns of inflation expectations becoming unanchored, along with consumer long-term inflation expectations plateauing (U.Mich 5-10Y unrevised at 3.0% in final May reading), although both measures clearly remain historically elevated.

Inflation breakeven 5Y (white), 5Y5Y (yellow) and U.Mich 5-10Y consumer inflation expectations (green)Source: Bloomberg