(Updates to reflect new landmark on inflation expectations, adds U.S and German inflation breakeven levels, graphic)LONDON, Oct 26 (Reuters) - Euro zone inflation expectations among bond investors hit a new seven-year high of 2.0509% on Tuesday, shooting past the European Central Bank’s target on the back of soaring oil prices and supply chain crunches around the world.
This adds to several months of high inflation readings in the euro zone and beyond, leading to speculation that the ECB’s pandemic-era stimulus is unsustainable.
An important market gauge of long-term euro zone inflation expectations, the five-year, five-year forward inflation swap, opened on Tuesday at 2.0509%, its highest since September 2014 and higher than the ECB target of 2%.
“Rising inflation swaps will be a key topic at Thursday’s ECB meeting,” analysts at ING wrote in a note.
So far, most euro zone yields have risen more or less in sync with each other.
ECB, ING, Global, “
Italy, Germany, Netherlands