Economics
Interest Rates After Inflation May Be a Real Bubble
- Deutsche Bank says Fed has driven mispricing of real yields
- Diverence from real GDP seen unsustainable, German bank says
Fed's Neel Kashkari on Interest Rate Dissent, Inflation
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U.S. equity and debt markets have ridden a reflationary wave this year, thanks to optimism over the momentum of the U.S. economy.
However, some key gauges for growth sit awkwardly with this narrative. Nominal yields on five-year Treasuries are negative when adjusted for the price outlook. And on Treasury Inflation Protected Securities five years forward, a metric the Federal Reserve uses to gauge long-term inflation expectations, the rate projected for 2022 is falling.