Gimme Shelter.

Underwriting the enemy.

1. Traders pushed bets on inflation to the highest level in more than a decade as fears of rising prices continued to mount in the US government bond market. The 10-year break-even inflation rate — a market measure of expected US inflation a decade from now — rose to 2.76 per cent on Friday, its highest level since 2006. The five-year break-even rate, measuring the pace of inflation in five years, rose to 3.18 per cent, the highest level in data going back to 2002, according to Bloomberg. These bets are the latest example of the fallout from Wednesday’s blockbuster consumer price index data, which showed that US inflation in October had risen at a rate of 6.2 per cent from the previous year. In response to the inflation figures, shorter-dated Treasury bonds have sold off, as investors have bet the Federal Reserve will need to lift interest rates sooner than previously expected. (via ft.com)

2. U.S. consumer sentiment has weakened to its lowest level in a decade, reflecting Americans’ concerns about rising prices and a belief that the Biden administration has failed to address the surge in inflation. The University of Michigan’s consumer sentiment index slipped to 66.8 in November, according to a survey published on Friday. That was down from 71.7 in October and well below economists’ forecast for a stronger reading of 72.4. The decline in sentiment this month came amid “an escalating inflation rate and the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation”, said Richard Curtin, chief economist of the university’s consumer surveys. (via ft.com)

3. Surging oil and natural gas prices are spurring production increases from West Texas to the Upper Great Plains that probably will lift output to levels not seen since the early days of the pandemic, according to Rystad Energy AS. U.S. shale-oil production is expected to reach 8.68 million barrels a day in December, which would be the highest since March 2020, analyst at the Oslo-based research house said. Meanwhile, nationwide gas output is on its way to a 6-year high. In the Permian Basin, crude production is expected to rise to 5.043 million barrels a day this month, which would be the most in data going back to 2015, according to Rystad. (via bloomberg.com)