- Over time, the long-term relationship between the yield on the 10-year Treasury note and inflation, represented by the core Consumer Price Index, tends to be relatively stable.
- At various junctures, this relationship may not hold; for example, when market shocks drive up demand for safe haven assets or when the Fed abruptly pivots on its monetary policy direction.
- Either the bond market may be reflecting peak growth and inflation, or the recent trend may be due to temporary technical factors and indicative of nothing as far as longer-term dynamics.
For further details see:
The Saga Of Strange Bond Yields, Continued