Via Bloomie:
With no imminent end to collapsing real yields – which just hit a new record low -1.10%, the side effects of financial repression warn of stagflation, asset bubbles and policy impotence. Fresh lows for U.S. 10-year real yields this week show a trap door opened by growing economic angst, climbing inflation expectations and an indefinite pause in monetary policy.
The Fed’s explicit guidance that rates will stay near zero for the foreseeable future has markets pricing a hold until at least 2023, effectively killing price discovery.