Why inflation won’t cause higher bond rates in the long run

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Regarding looming inflation risks and their resulting Treasury yield rates, Wall Street veteran and co-founder of DataTrek Research Nicholas Colas stated that he has “never seen a stronger consensus” surrounding any macroeconomic issue in his career.

“Fed money printing plus fiscal stimulus/debt issuance plus economic reopening is supposed to equal high and likely lasting inflation,” Colas said. “The 10-year Treasury will go to at least 2 percent and maybe 3 percent or higher.”

However, in spite of the clear consensus on inflation and bleak forecasts, the 10-year Treasury yield has seemingly shrugged off the looming expectations. Colas noted that the year-to-date high 10-year Treasury yield (^TNX), 1.74% seen on March 19, has still not been broken. It currently stands at 1.53 as of June 8.

In addition to the US Treasury, Colas cited yield rates from central banks around the…

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