Investors in the US bond market and the euro zone are assessing a rebound in inflation, amid the rise in the price of oil and due to expectations of a fiscal spending package solid under the presidency of Joe Biden.
As represented by the 5-year inflation swap, US inflation expectations have risen to the highest level since 2018. Meanwhile, the inflation swap of the eurozone has risen to the highest level since 2019.
A continued rebound in inflation expectations can benefit the US dollar and inflation hedging assets like gold.
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