Do Bond Traders Know Something About Inflation We Don't?
Treasury yields are tumbling ahead of U.S. inflation data that could be the highest in decades.
Investors, policy makers and lawmakers are focused on higher prices.
Photographer: Kevin Dietsch/Getty Images
In theory, few bond investors would jump at the chance to buy 10-year U.S. Treasuries at a yield of less than 1.5% some 24 hours before a much-anticipated report is expected to show the highest core inflation rate in America since the early 1990s — when that same yield was above 6%.
And yet the world’s biggest bond market staged a ferocious rally on Wednesday that took the benchmark 10-year yield to as low as 1.47%, below its 100-day moving average for the first time in 2021 and right up to a key resistance level from March and May. It’s the most convincing bullish move in a long while and a sharp departure from the recent narrative of accelerating U.S. growth and fiscal spending pushing Treasury yields ever higher.