Long-term interest rates in the United States are rising, and are likely to continue heading up. Over the past 20 months, the yield on 10-year treasury bonds has more than doubled, from 1.38 per cent to 2.94 per cent.
Why is this happening? About half of the 1.56-percentage-point rise is attributable to an increase in the real interest rate, as measured by the inflation-indexed 10-year treasury bonds, whose expected real yield has risen from zero in July 2016 to 0.82 per cent now. The other half of the rise in the interest rate reflects the increase in the expected rate of inflation ...
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First Published: Thu, March 01 2018. 22:56 IST
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