FIBR - The Risk-Adjusted Real Long-Term Real Rate
Editor's note: This article was originally published on April 30 by Menzie Chinn here.
One argument against the secular stagnation thesis is that the risk-adjusted real rate is not particularly low. I’m dubious.
In Figure 1, I depict the real ten-year Treasury yield, adjusted by survey-based inflation expectations (from the Cleveland Fed, Survey of Professional Forecasters), and the TIPS yield.
Figure 1: Ten-year constant maturity Treasury yield adjusted Cleveland Fed ten-year expected inflation and Kim-Wright term spread (dark blue), adjusted by Survey of Professional Forecasters median ten-year expected inflation and Kim-Wright term premium (teal