FT News Briefing US Treasury ‘real yields’ about to eclipse inflation expectations
Apr 19, 2022
Bank of America shares a surprisingly optimistic revenue outlook, defying economic headwinds. Meanwhile, the battle over Mexico's radical energy reform leads to a significant political defeat for President López Obrador. The discussion dives into the rise of real yields on U.S. treasury bonds, hinting at potential shifts in investment strategies. Additionally, insights highlight how consumers are navigating rising costs, showing resilience despite economic challenges. Join for a dynamic exploration of these pivotal financial trends!
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Real Yields Turning Positive
- Real yields on U.S. government bonds may soon turn positive for the first time since March 2020.
- This shift, driven by rising interest rates, could significantly impact financial markets.
Defining Real Yield
- Real yield is the return on an investment after adjusting for inflation.
- When negative, inflation erodes your returns, effectively losing money.
Investor Behavior in the Bond Market
- As yields rise and prices fall, investors are incentivized to buy bonds.
- However, even with these conditions, investors are hesitant, potentially due to the Federal Reserve's large influence on the market.