The first two parts of this series outlined important considerations for the Treasury market.
Part I discussed several common arguments in favor of inflation. Through a comprehensive overview of macroeconomic trends, we settled on the economic output gap as the best long-term forecasting tool for inflation, suggesting that core inflation is likely to sink near record lows in the coming years. A continued decline in the path of actual and expected inflation will weigh on the risk-free rate and push Treasury rates closer to the zero-lower-bound "ZLB" on the long-end of the curve.