Long US breakeven slope: 2y vs 5y

If, as far as inflation is concerned, “ the last mile is the hardest ”, the inverted sign of the 2-5y breakeven UST curve presents an attractive opportunity. As central banks and investors might be wrong about the mean-reverting feature of the inflation dynamics, given recent surprises on the two last data points , either the 2-year tenor is too high or the 5-year tenor is too low. We enter a long 2-5y UST breakeven slope at - 0.4 bp and target a + 25 bp level in the next 3 month s . We stop at - 14 bp.