The highly anticipated jump in US inflation has arrived. While the sustainability of the rise remains open for debate, recent readings on inflation have surged and market-based indicators show sizeable increases in inflation expectations.

Over the past three months, US 10-year inflation break-evens have climbed nearly 40 basis points, reaching a cycle high of more than 2.5 per cent. Most of the concern appears focused on the next few years, where markets are signalling price increases of substantially over 2 per cent, but longer-term inflation expectations have also moved up.