Real Yield Rise a Vote of Confidence in Fed, Warning for Stocks
- Inflation-adjusted yields soared in past month on hawkish Fed
- Ten-year real yields headed back toward positive territory
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Surging U.S. real yields suggest bond traders believe the Federal Reserve can get a grip on inflation, but are likely to put further pressure on stocks and precious metals.
The benchmark inflation-adjusted Treasury yield has jumped more than 80 basis points in a month and touched a two-year high of minus 0.19% on Wednesday, as the Federal Reserve made it clear it will aggressively tighten policy. The move came even as gauges of expected inflation shrank, showing investors are becoming convinced the central bank will do whatever it takes to rein in rising prices.