US inflation expectations, as per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, recovered from the four-month low by the end of Friday’s North American session.

That said, the inflation gauge’s latest print is 2.56%, following the previous three-day downtrend that poked the lowest levels since February at around 2.50%.

The corrective pullback in inflation expectations probes the market sentiment, which previously portrayed cautious optimism, amid fears of higher interest rates. The fears of central bankers’ aggression also took clues from Reuters’ news suggesting that the Bank for International Settlements (BIS) calls for interest rates to be raised "quickly and decisively" to prevent the surge in inflation from turning into something even more problematic.

The same joins geopolitical tension surrounding China and Russia to weigh on the risk appetite even if the US dollar fails to benefit from its safe-haven allure.

Also read: S&P 500 Futures, US Treasury bond yields portray anxiety ahead of central bankers’ debate