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NEW YORK, March 23 (Reuters) - 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 Representatives.
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)