- The spread between nominal less inflation-indexed Treasury rates continues to rise - an increase that many analysts cite as a key indicator for the revival in reflation sentiment.
- The key driver for this reflationary trend is primarily due to an ongoing slide in the real Treasury yield, supported by a relatively mild rise (so far) in the nominal yield.
- Prior to the pandemic, the nominal and real 5-year yields were closely correlated. Over the last year, however, the relationship broke down.
For further details see:
The Great Divergence: Nominal Vs. Real Treasury Yields