Economic Slowdown Concerns Top Inflation Worries For Bonds

2025-02-28 09:28:00 ET

Summary

• Sticky inflation risk is still a threat for the bond market, but concern that the US economy is slowing has become the main factor driving Treasury yields lower recently.
• The drop in the 10-year rate is surprising given that progress on inflation has stalled recently.
• Although it’s premature to assume that inflation’s pace is accelerating, recent data suggests that disinflation has faded and so the Fed’s 2% inflation target remains elusive, at least for now.
• A broad review of economic indicators still reflects moderate growth. But the rapidly changing policy arena piloted by the White House is changing the dynamic.

Sticky inflation risk is still a threat for the bond market, but concern that the US economy is slowing has become the main factor driving Treasury yields lower recently....

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