US Treasury yields hit an intraday high of 1.61% yesterday before retreating to less than 1.5%. Market participants have attributed this to inflation expectations rising as fiscal and monetary policy has loosened. Here, we take a look at inflation expectations and US 10Y Treasury yields with inflation expectations being measured by the 10Y breakeven inflation rate. Looking at historical moves in US Treasuries over the last 6 years, inflation expectations have been around 1.5% to 2%. During this time period, despite loose policy, 10Y yields have been in the range of 1.5%-3%, hovering largely above 2%. A closer look at the chart also shows that while 10Y yields have risen 40bp MTD and 13bp in the last week, inflation breakevens have fallen 3bp and 9bp respectively.
US Treasury Yields Continue Its Journey Upwards
