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The US 10-year breakeven rate, a bond market’s measure of expected inflation derived from 10-Year Treasury Constant Maturity Securities and 10-Year Treasury Inflation-Indexed Constant Maturity Securities, fell from 1.76% to 1.63% in September. 

The market-based measures of long-term price pressures declined even as the Federal Reserve adopted a more flexible approach to controlling inflation at the end of August. 

The dollar index also rose by nearly 1.8% in September – the first monthly gain since March. 

The decline in inflation expectations could be attributed to the pullback in oil prices. The West Texas Intermediate crude fell by 5.6% in September, snapping a four-month winning trend. 

And while the 10-year breakeven rate still holds well above the March low of 0.5%, it is yet to find acceptance above the Fed’s 2% target, which the central bank has consistently missed since 2012.