10-Year Treasury Rate Dips Below 1.5%, Here’s What It May Be Saying About Inflation

Inflation fears taking back seat to long-term growth hurdles



A key market signal on inflation has taken a dip ahead of the second half of 2021.

When the benchmark 10-year Treasury rate quickly climbed to 1.7% in March, Wall Street went on high alert, worrying about the Federal Reserve’s potential to go overboard with its support for the economy during the pandemic, while risking an inflation hangover of the likes not seen since the 1970s.

Now, three months later, the 10-year yield TMUBMUSD10Y, 1.458% has tumbled to 1.479% as of Tuesday, shedding 11.3 basis points so far in June, but also resisting the climb toward 2% that many strategists penciled in for year-end.

What does that mean for inflation expectations? “The 10-year Treasury is signaling that we are not going to get sustained inflation above 2%,” Kathy Jones, chief fixed income strategist at Schwab Center for Financial Research, told MarketWatch.

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