The Fed's war on inflation isn't over just yet, this bond-market gauge says

• Traders expect the US inflation rate to hover above 2% for years, according to one bond-market gauge.
• That means the Federal Reserve's war on soaring prices isn't over just yet.

The Federal Reserve's war on soaring prices might not be over just yet, a key bond-market gauge is showing ahead of Thursday's July inflation report.

While the Consumer Price Index has cooled away from four-decade highs over the past 12 months, the 5-year breakeven inflation rate is holding steady at over 2.3%, according to data from Refinitiv.

The metric – which measures the gap between 5-year US Treasury yields and 5-year inflation-linked securities – is used to determine where traders see the rate of price rises heading over the next half-a-decade.

It's barely budged in recent months and is still hovering above the Fed's 2% target, signaling the central bank can't expect a swift victory in its war on soaring prices even though it's lifted interest rates from near-zero to over 5% over the past 17 months.

On Thursday, the July CPI report will show whether inflation rose up or fell last month, with economists surveyed by Reuters expecting it to climb by 3.3%.

Wall Street has started to fret about soaring prices again in recent weeks, with the cost of commodities linked to energy and food edging higher.

Crude oil prices have risen nearly 10% over the past month, per the West Texas Intermediate benchmark, with major producers Saudi Arabia and Russia bringing in supply cuts.

Meanwhile, wheat prices spiked in late July after Russia pulled out of the Black Sea Grain initiative and started attacking Ukrainian ports, sparking fears of fresh global food security issues.