Treasury Rates: As of August 25th, 2022
Daily changes in the US 10 Year Treasury rates are the blue bars while the red line is the 14-day cumulative change in rates: 20bp INCREASE. For the blue bars, it is unusual to have changes of greater than 0.10 in a single day and 0.20 is VERY unusual.
Rates for ALL terms were up this week. The Yield Curve for short terms remains steep while the longer term (5+ years) remains INVERTED. Could we be in for a short-term period of stagflation? It will take at least 12 months for the Energy Prices to “fall” out of the CPI 12-month rolling calc.
In the meantime, we can have a slowing economy with higher interest rates while the Fed fights inflation. This is what an inverted yield curve is pointing to. While CPI was down on 8.10.22 CORE components are likely to be higher even though energy prices are declining.