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The US and Eurozone bond market investors are pricing an uptick in inflation amid the oil price rally and due to expectations for a robust fiscal spending package under Joe Biden’s Presidency. 

As represented by the 5-year, 5-year forward inflation swap, the US inflation expectations have climbed to the highest level since 2018. Meanwhile, the Eurozone inflation swap has jumped to the highest since 2019. 

A continued uptick in inflation expectations may put a bid under the US dollar and perceived inflation hedges such as gold.