Barclays: Market pricing of US inflation-protected bonds may reflect a higher inflation risk premium.

Barclays strategist Jonathan Hill stated in a report that Barclays expects by 2026, the pricing of US inflation-protected bonds in the market will reflect a higher inflation risk premium. He said that Barclays' preferred expression for this key trade is to be long the 10-year breakeven inflation rate. He said that fundamentally, initial indications suggest that market pricing is at or below levels consistent with the Federal Reserve's 2% inflation target, with little to no positive inflation risk premium reflected. He said, "Given the apparent lack of upward inflation risk premium in market pricing, despite several notable potential catalysts in the future, we believe there is a rationale to take a long position in the breakeven inflation rate."