Bond yields hold big clue on inflation

Former Chase Chief Economist Anthony Chan on the Federal Reserve and President Biden’s claim that spending money will moderate inflation.

Plunging bond yields have farther to fall as the market comes to the realization that the recent bout of inflation is transitory, according to Wall Street strategists. 

The 10-year Treasury note yield on Monday fell 12 basis points to 1.18%, the lowest since Feb. 11. With the decline, the benchmark yield has fallen 59 basis points since topping out on March 31. 

“The yield on the 10-year note has sliced below the 200-day moving average in these past 24 hours like a hot knife through butter,” wrote David Rosenberg, chief economist and strategist at Toronto-based Rosenberg Research. “There is nothing but dead air down to 1.0% on the charts.”

Source: Tradeweb ICE Close, Dow Jones Market Data

What started as a steady decline in yields has accelerated in recent weeks as the bond market has come to terms with the…

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