VGSH - The Sloppy Dance Between The U.S. 10-Year Yield And Inflation
2024-02-15 11:30:00 ET
Summary
- Inflation and Treasury yields move together to a degree, but they’re hardly joined at the hip in the short term.
- For the most part, it’s reasonable to assume that inflation influences the 10-year, although at times the causality can flow the other way.
- The odds appear relatively low that the 10-year yield will spike higher from current levels (4.27% as of Feb. 14).
Yesterday, I outlined the case that several ‘fair value’ models suggest the current US 10-year Treasury yield appears high relative to the fundamentals. As a quick follow-up, what does a simple empirical review of historical suggest vis-à-vis the 10-year rate and the latest offending inflation data point that triggered a sharp rise in the benchmark yield on Tuesday?...
The Sloppy Dance Between The U.S. 10-Year Yield And Inflation