The US dollar is getting hit on expectations that falling inflation will sideline the Fed.
US 5-year breakevens are down a whopping 8 basis points today and imply average inflation of 1.16% over that period.
But the real drama is in two-year breakevens hit 0.16% basis points today in a 24 basis point blowout before a rebound to 0.30%, which is still down 10 bps on the day. To me, it looks like there might have been a squeeze.
US 2 year breakevens
There will be more worry about inflation in the U Mich consumer sentiment report, read the preview.
