Inflation expectations rise on both sides of Atlantic

The US and Eurozone bond market investors are pricing an uptick in inflation amid the oil price rally and due to expectations for a robust fiscal spending package under Joe Biden's Presidency. 

As represented by the 5-year, 5-year forward inflation swap, the US inflation expectations have climbed to the highest level since 2018. Meanwhile, the Eurozone inflation swap has jumped to the highest since 2019. 

A continued uptick in inflation expectations may put a bid under the US dollar and perceived inflation hedges such as gold.