10-Year Treasury Yield Marches Higher
The 10-year yield has been off to the races since mid-September when the Fed lowered rates. Treasury investors correctly fear accelerated price inflation given that Powell and the Fed never really squashed inflation.
Treasury investors holding 5, 7, 10 year maturity Treasuries ought to be looking for a higher yield given the Fed’s loose monetary policy and a lack of discipline on the fiscal spending side.
We have warned about the 10-year yield moving higher for a few months. There is upside to the 10-year yield from here, which will be a function of Yellen’s upcoming Treasury auctions (to plug the deficit), The Fed’s rate decisions over the next several months, and the pace of fiscal spending by the next Administration.
