The Federal Reserve is widely expected to trim interest rates today, and the prospect of low and possibly lower inflation in the months ahead is a key factor.
The Treasury market's implied inflation forecast is hinting at the possibility that pricing pressure may be set for a new downturn. The spread on the 5-year nominal and inflation-indexed Notes, for instance, has been inching lower in recent days, suggesting that this barometer of market-based expectations is once again poised to slide.
After stabilizing at around 1.6% earlier this month, the implied 5-year inflation outlook eased in