Inflation breakevens continue to rise

10-year now at 2.37%

Chart of the Day

While most of the 6 bp rise in the US 10-year yield was from higher real interest rates yesterday, the further 2 bp rise in the breakeven inflation rate still took it to a new multi-year high of 2.37%. The US 10-year TIPS yield has now moved 2 bp lower in the past week, while the breakeven inflation component moved 6 bp higher.

Macro

Dallas Fed manufacturing sector survey rose in March, although it might still normally be consistent with a lower manufacturing ISM.

In Japan, the unemployment rate was unchanged at 2.9% in February. It has remained lower than the jobs-per-applicant ratio might suggest.

Of the major economies, the Citi economic surprise index for China is currently highest, while that for Japan lowest.

Markets

In the past week, the S&P 500 has risen by 0.8%, the Nasdaq has fallen by 0.9%, and the Russell 2000 has fallen by 4.8%.

US yields rose yesterday, and the 5-year is now the highest since early 2020, though longer-dated ones remain lower than their recent highs. Over the past week, the 10-year has risen by 4 bp and the 30-year has risen by 4bp .

The VIX rose to 20.7 yesterday, from 18.9. Meanwhile, the MOVE index of implied bond market volatility rose to 66.0, from 61.5. A week ago, it was higher at 67.6.

The CBOE US equity put/call ratio is at 0.58 - higher than recently, but lower compared to the long-run average of 0.62

It was a weak day for the precious metals yesterday. Moves the past week have ranged from a fall of 3.9% for silver to a fall of 0.1% for platinum.

Likewise, moves in the major commodities in the past month have ranged from -7.1% for silver to +7.7% for palladium

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