According to the New York Federal Reserve, one-year inflation expectations rose to 3.0% in the latest survey from 2.8% previously and the highest reading since the middle of 2015.
Inflation expectations will be an important element of Fed thinking over the next few months, especially as the FOMC had worried previously that low expectations would prevent a rise in the inflation rate.
Dallas Fed President Kaplan stated that the Fed should raise interest rates again sooner rather than later with rates increasing in a gradual and patient manner.
The dollar’s trade-weighted index hit the highest level for over three weeks and the Euro dipped to test support below the 1.0600 level as strong risk appetite curbed Euro support.
Commentary from Fed Chair Yellen will be watched very closely on Tuesday with markets currently putting the chances of a March interest rate increase at around 22%.
Any hints of a March hike would provide further net dollar support as the Euro edged back above 1.0600 on a wider US retracement.
Related Insights
Daily Brief – Volatility on offer
Charles Porter
Thu 13 Nov 2025
Volatility on offer As we approach year end, traded ranges have remained relatively narrow despite significant macroeconomic themes developing. Looking ahead beyond year end, we note the options market continues to severely underprice volatility versus historical standards. Within such an environment, broader risk appetite remains constructive. As a result, the carry trade has continued its […]
Daily Brief – One in three
Charles Porter
Tue 4 Nov 2025
One in three Until recently, the market had held the probability of a rate cut at the Bank of England’s November meeting at near zero. Above-target inflation and insufficient evidence of faltering economic growth alone suggested the BoE would continue to adopt a wait and see approach. Combine that with the uncertainty of the UK […]
Daily Brief – Just in time?
Charles Porter
Tue 11 Nov 2025
Just in time? As we wrote yesterday, the latest US government shut down has become the longest in history. The impact upon sentiment and consumption is sure to have been significant but it is too early to identify from the data just how much damage was done. Thanks to the eight democrats who have broken […]
