There Are No Inflation Fears In Long Term Bonds

EDITOR'S NOTE: There are numbers and trends that point to long-term inflation fears everywhere you look these days. However, Mish Talk reports the one place you don’t see this is in the long-term bond market where “yield on the 30-year long bond peaked at 2.45% on March 18, 2021. Now it's 1.88%.” While this might sound good, Mish Talk worries that these numbers are leading to an “autopilot” strategy from the Fed. The issue with this is the result will be that “the Fed is going to hike the US economy into a recession.” This is yet another example of the Fed being caught in a difficult situation and, by not dealing well with any of it, there could be major economic problems on the way. 

Looking for inflation fears? Do look at long term bonds.

Photo: Mish Talks

Yield on the 30-year long bond peaked at 2.45% on March 18, 2021. Now it's 1.88%.

Charts in this article are as of the market close last Friday.

March 18, 2021 Yields

• 30-Year: 2.45%
• 10-Year: 1.71%
• 5-Year: 0.86%
• 2-Year: 0.16%
• 1-Year: 0.08%

November 5, 2021 Yields

• 30-Year: 1.88%
• 10-Year: 1.44%
• 5-Year: 1.06%
• 2-Year: 0.40%
• 1-Year: 0.15%

March 18 to November 25 Yield Change

• 30-Year: -57 Basis Points
• 20-Year: -47 Basis Points
• 10-Year: -27 Basis Points
• 7-Year: -4 Basis Points
• 5-Year: +20 Basis Points
• 3-Year: +32 Basis Points
• 2-Year: +24 Basis Points
• 1-Year: +7 Basis Points

Treasuries Most Sensitive to Rate Hiked

US Treasuries between 2 and 5 years in duration have been the most sensitive to rate hikes.

Originally posted on Mish Talks.