by Calculated Risk on 12/09/2014 06:44:00 PM

From the WSJ: Drop in Inflation Gauge May Complicate Outlook for Interest Rates

An inflation gauge closely watched by Federal Reserve officials has fallen to the lowest level since the financial crisis, potentially complicating the interest-rate outlook as investors brace for a likely Fed rate increase as soon as mid-2015.

The five-year forward five-year inflation breakeven rate hit 2.0185% this month, the lowest since Dec. 31, 2008, according to the latest data provided by Rabobank.

With the unemployment rate still elevated, inflation below target, and inflation expectations falling, I expect the Fed will be patient.

Wednesday:
• At 7:00 AM ET, Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 10:00 AM, Q3 Quarterly Services Report from the Census Bureau.

• At 2:00 PM, the Monthly Treasury Budget Statement for November.