Markets Tell the Fed It’s Finally Getting an Edge on Inflation
- Bond gauges showing higher expected prices count as Fed gain
- Investors, Fed remain unfazed as price pressures nudge higher
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The $20 trillion U.S. Treasury market is giving the Federal Reserve a thumbs-up for its efforts to revive inflation after the coronavirus pandemic threatened to inflict a damaging bout of deflation on the U.S. economy.
The best measure of that is inflation-adjusted interest rates on 10-year Treasury bonds, which have plunged well below zero as nominal yields held fairly steady. Other signs of success include rising expectations for future prices among U.S. households.