Market inflation expectations are rising: The 5-year breakeven inflation rate has jumped to 2.66%, the highest since March 2023. Since September, 5-year inflation expectations have surged by nearly 80 basis points. At the same time, the 2-year inflation expectations have risen from ~1.50% to 3.07%, the highest in at least 2 years. This is despite the Fed cutting rates by 100 basis points to 4.50%. The market thinks the fight against inflation is far from over.