By the close of Wednesday's North American session, US inflation expectations—as measured by the 10-year breakeven inflation rate—had fallen for the third day in a row to their lowest level since late February. Despite this, the inflation gauge's most recent reading of 2.54% remains unchanged from its reading of February 25.
Following a three-day downturn, the US dollar continues under pressure at 104.20, suggesting that it is bearing the brunt of the most recent drop in inflation expectations. The dollar gauge is preparing for its first weekly drop in four weeks as a result.
It's important to note that Fed Chair Jerome Powell has also expressed a willingness for higher rates while emphasising the data-dependency for an unexpected increase in benchmark rates. The US Treasury yields appear to have come under downward pressure as a result, and this has helped the stock market to consolidate its losses.
While the US 10-year Treasury rates remain under pressure around the weekly low, down 2.8 basis points to 3.13 percent by press time, S&P 500 Futures fail to find a clear direction.
In the near future, it will be crucial to keep an eye on the US S&P Global PMIs for June and the weekly Jobless Claims data, which will come before the second round of Fed Chair Jerome Powell's testimony.
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