(Bloomberg) -- Janet Yellens emphasis on a gradual path to higher U.S. interest rates is being vindicated by a decline in the inflation outlook among traders.
The 10-year break-even rate, derived from the difference between nominal and index-linked bonds, fell to 1.83 percentage points Tuesday, the lowest close since June 1, as oil prices declined. The spread between two- and 30-year yields, which is also influenced by the inflation outlook, was at the narrowest in more than a month. Federal Reserve Chair Yellen told the Senate Banking Committee last week she prefers to tighten in a prudent and gradual manner. Subdued consumer-price gains lessen pressure to lift borrowing costs.
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