Inflationista crushed by jackknifing yields

Wednesday, 7 July 2021

JPM with the note:

Treasury yields declined 2-6bp following a somewhat weak ISM services index release. The reaction of the Treasury market to data over the last week and the lack of reaction in the TIPS market indicates this move has been exaggerated by short covering….

…this has left 10-year Treasury yields about 25bp, or 3 standard deviations below their model-implied fair value

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.