NEW YORK, March 23 The U.S. bond market's gauges
on 10-year inflation expectations hovered at their lowest in
more than two months on Thursday in advance of an $11 billion
auction of 10-year Treasury Inflation Protection Securities at 1
p.m. EDT (1700 GMT).
Investors' outlook on domestic inflation has softened this
week as oil futures slid to four-month lows, prompted by
concerns that output curbs led by OPEC have not dented record
U.S. crude stockpiles.
Doubts that U.S. President Donald Trump and leading
Republican lawmakers can quickly enact tax cuts, deregulation
and infrastructure spending also damped a view that inflation
will accelerate from its current modest pace.
Top Republicans are struggling to secure votes to start
dismantling the Affordable Care Act in the House of
Worries that U.S. fiscal stimuli will be stalled have
rattled stock markets and knocked down prices across risky
assets this week, raising concerns investors will discard their
bullish bets on faster U.S. economic growth that were triggered
by Trump's presidential win.
"The risk remains that the larger reflation trade will
unwind with the market likely to reprice sharply in the
medium-term if Trump and Congress fail to pass anything
meaningful in the next few days," BMO Capital interest rates
strategist Aaron Kohli wrote in a research note.
In early Thursday trading, the 10-year inflation breakeven
rate, or the yield difference between 10-year Treasury Inflation
Protected Securities and regular 10-year Treasury notes, was
last at 1.97 percent, down over 1 basis point from Wednesday,
Tradeweb data showed.
The 10-year TIPS breakeven rate hit 1.95 percent on
Wednesday, the lowest since Jan. 17, according to Reuters data.
The breakeven rate on the upcoming 10-year TIPS supply
was last quoted at 1.96 percent.
In the energy market, U.S. oil futures were down 0.5 percent
at $47.80 a barrel after declining to $47.01 on Wednesday, the
lowest since Nov. 14.
(Reporting by Richard Leong; Editing by Bernadette Baum)