U.S. inflation continues to soar

    Gasoline futures rose to a near three-year high as oil prices surged after a cyberattack shut down a key U.S. pipeline. But the actual reason is that market inflation expectations are already high due to the boosted U.S. economic growth prospects and Biden’s infrastructure and pandemic relief plans.

    Inflation expectations for the next five years in the U.S. bond market surged to the highest level since 2006 on Monday. The five-year \ inflation rate, which reflects the difference between yields on inflation-protected bonds and regular bonds, rose as much as 3.4 bp to 2.7327%. Nominal bond yields were relatively flat, with the 5-year yield falling about 1 bp to 0.76%.

    The Biden administration in the United States is trying to use all available methods to curb the surge in energy prices. However, with the rapid rise in energy prices, the White House has very limited ways to achieve its purpose. Under the transmission of rising energy prices, the high inflation in the United States may further rise, and the shortage of goods supply will also increase the expectation of interest rate hikes. It is reported that the shortage of supply and demand in the United States is very serious. Among them, a survey shows that 16% of beverages, 14% of casual snacks, and 13% of frozen goods in the United States are already out of stock, and Walmart, UPS, Home Depot and other companies have all sold out. In the context of insufficient supply, US price levels are soaring across the board.

    In this case, the Fed may advance the rate hike expectations.