January 9, 2019 / 5:00 PM / 8 days ago

UPDATE 1-U.S. TIPS breakeven rates climb with rising oil prices

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NEW YORK, Jan 9 (Reuters) - The U.S. bond market’s gauges of investors’ inflation expectations turned higher on Wednesday as the ongoing rebound in oil prices rekindled bets on faster domestic price growth in the coming months.

U.S. West Texas Intermediate crude futures rose to 3-1/2-week highs to over $52 a barrel, prompted by hopes on talks between China and the United States in a bid to resolve the trade spat between the world’s two biggest economies.

At 11:50 a.m. EST (1650 GMT), the yield spread between 10-year Treasury Inflation Protected Securities and regular 10-year Treasuries, or the 10-year inflation breakeven rate, was 1.834 percent, up nearly 2 basis points from late Tuesday, according to Tradeweb data. It is hovering about a three-week high after hitting the lowest levels since June 2017 last week.

TIPS breakeven rates had fallen in the fourth quarter of 2018 on worries about slowing economic growth and deceleration in inflation.

Reporting by Richard Leong Editing by Chizu Nomiyama and Jonathan Oatis

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