A key measure of the bond market’s expectations for upward price pressures over the next five years, known as the five-year breakeven inflation rate, surged to an all-time high of 3.113 percent on Nov. 10, shortly after government data was released showing consumer price inflation rising at its fastest annual rate in nearly 31 years.
The sharp rise in the bond market-derived gauge suggests that investors expect inflation to average over 3 percent a year for the next five years and that upward price pressures will be more persistent than the Fed’s “transitory” expectations, potentially forcing the central bank to accelerate its interest rate hike schedule.
