US inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, dropped for the third consecutive day to by the end of Thursday’s North American session, per the FRED website.

That said, the inflation gauge dropped to the 2.46% level at the latest, the lowest readings since December 21.

The softer inflation expectations test the market fears of the Fed’s early rate hike, which in turn challenge US Treasury yields and US dollar advances.

It’s worth noting that the recently hawkish Fedspeak and FOMC Minutes weighed on the commodity prices. As a result, the US 10-year Treasury yields refreshed a nine-month high to poke 1.75% before closing with 2.5 basis points (bps) of a daily gain near 1.728%. The same weighed on the Wall Street benchmarks even as downbeat data pushed bears to satisfy with smaller losses.

While the easy inflation expectations may allow traders to pare recent losses linked to the commodities and Antipodeans, hawkish hopes from the scheduled US jobs report may favor the US bond yields and the US dollar, which in turn may weigh on the commodities.

Read: Gold Price Forecast: XAU/USD bears await US NFP near five-month-old support below $1,800