US inflation expectations poke Fed tapering plans

US inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data stays pressured near the lowest since August 23 by the end of Tuesday’s North American trading.

In doing so, the risk barometer extends pullback from the monthly top, also the highest since early August. That being said, the gauge remains unchanged at 2.29% per the latest reading.

During the last week, the New York Fed survey showed that the three-year inflation expectations jumped to the highest since 2013, raising the case for the Fed’s tapering. However, a mixed bunch of consumer-centric data challenged the Fed hawks afterward.

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It’s worth observing that the inflation measures have been easing of late and may help the US central bank to avoid scaling back the easy-money policy.

Even so, the Fed is known for surprises and policymakers’ latest comments, before the blackout period, have been favorable to the tapering. Hence, a for the same is more likely, which in turn could weigh on the market sentiment, equities and gold.

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