Oil is soaring on geopolitical concerns and it is unlikely to drop too far given that a full resolution for the Ukraine crisis looks a long way off. Worse still, inflation in the US is at 40-year highs, reaching 7.5%, a level not seen since 1982, a year in which the US experience the worse economic downturn since the Great Depression in 1929.

However, the bond market believes that inflation over the long term will remain contained. The 10-Year breakeven inflation rates had been trading at around the same range since May 2021.

The breakeven inflation rate represents a measure of expected inflation derived from 10-Year Treasury Constant Maturity Securities and 10-Year Treasury Inflation-Indexed Constant Maturity Securities. The value implies what market participants expect inflation to be in the next 10 years, on average.

Investors can check out the latest value here: 10 Year Breakeven Inflation Rate

The 10-year breakevens remained stable even as WTI surged more than $35 a barrel since May 2021. Perhaps investors figure that high oil price is unsustainable and there is no chance that Russia and US will enter into a war.

Also, here's a
video of why Russia and the US are not going into a war but why the US and Russia are playing this dangerous game in Ukraine.

Source: iSquare Intelligence