NEW YORK, Sept 1 (Reuters) - The U.S. bond market’s gauge of inflation expectations fell on Tuesday with weaker oil prices in the wake of disappointing Chinese manufacturing data that revived anxiety about a slowing global economy.
U.S. crude futures fell $2 or 4 percent to $47.18 a barrel in early trading, halving Monday’s gains tied to news of lower domestic output.
A renewed drop in energy costs has raised concerns about its dampening effect on overall U.S. price growth as Federal Reserve policy-makers have been wary that inflation has remained far below the central bank’s 2 percent target.
The yield premium on benchmark 10-year Treasuries notes over 10-year Treasury Inflation Protected Securities contracted to 1.61 percentage points, 2 basis points tighter than Monday, according to Tradeweb.
The 10-year TIPS inflation breakeven rate hit a two-week peak of 1.64 percent on Monday.
Reporting by Richard Leong; Editing by Chizu Nomiyama