LONDON, May 11 (Reuters) - Benchmark 10-year U.S. Treasury yields fell to their lowest levels in almost a week on Wednesday, pulling further away from recent highs ahead of data that could show surging U.S. inflation finally starting to peak.
Economists polled by Reuters forecast headline inflation will come down to 8.1% annually in April from 8.5% in March.
Ten-year Treasury yields fell to as low as 2.927% , down 5 basis points on the day and over 25 bps lower from more than three-year highs above 3% hit on Monday.
Yields were lower across the U.S. curve, with five-year yields also down about 5 bps on the day at around 2.86% .
Analysts said a fall in inflation expectations, driven by a perception that central banks will contain inflation through tighter monetary policies and a weakening global economic outlook, helped explain the pullback in Treasury yields.
One measure of U.S. inflation expectations, the five-year break even rate, has fallen to around 2.89% , its lowest since February and down from as high as 3.6% last month.
"The combination of central banks hiking because they are worried about inflation and a weaker outlook helps explain why inflation expectations are coming down," said Lyn Graham-Taylor, senior rates strategist at Rabobank. (Reporting by Dhara Ranasinghe Editing by Tomasz Janowski)