Inflation expectations for coming years jump after August CPI data

Inflation breakeven rates, which reflect market expectations of the inflation outlook, all jumped after the release of the August CPI data. The two-year breakeven rate rose to 2.43%, while the 5-year breakeven advanced to 2.60% and the 10-year rate was 2.44%, according to Bloomberg data. The jumps reflect the unexpected upside surprise of the August CPI, but were still less than the advances seen in nominal Treasury yields, which soared on Tuesday in anticipation of future Fed rate hikes, according to Ben Emons, managing director of global macro strategy at Medley Global Advisors in New York. The substantial rise in Treasury yields was led by the 1-year yield, while all three major U.S. stock indexes
DJIA,
-3.02%
SPX,
-3.35%
COMP,
-4.20%
remained lower on the day.