Coming up later today, we’ll have the University of Michigan consumer sentiment survey at 1400 GMT. And while the headline estimate will offer some insight into how US consumers are feeling about the economy, I reckon the standout figure will be the inflation expectations figures.

As a reminder, year-ahead inflation expectations jumped to 4.6% in September from 4.0% in the month before. Meanwhile, the five-year outlook edged higher to 3.4% in September from 3.3%.

So, what should traders be looking out for this time?

With oil prices having surged again recently, the first thing to watch is whether short-term inflation expectations continue to rise. Having said that, do also pay attention to the long-term reading as another jump there could raise concerns about inflation expectations becoming more entrenched.

Now, how does this tie to what is happening with broader markets?

Well, a hotter set of numbers could add to the unease in the bond market and potentially keep Treasury yields elevated while lending some support to the dollar. That is especially worth watching after the pullback in yields yesterday, with a hotter set of numbers potentially reviving the selling pressure seen in bonds earlier this week.

That being said, I wouldn’t read too much into one consumer survey number. After all, the reality is that what households expect inflation to be and what inflation actually turns out to be are two different things.

And with markets already needing to deal with higher yields and renewed inflation worries, the bigger test will come with next week’s US CPI report instead. The survey today might offer some clues about how consumers are feeling, but the CPI numbers will give traders a much clearer picture of where price pressures actually stand.

This article was written by Justin Low at investinglive.com.