Issue 1 · Late October 2026
US, German and Japanese government bond yields, the real interest rate, inflation expectations and the yield curve. Each number compares the indicator only with its own past: the share of past months it is higher than; 50 is normal. For prices and rates, what is compared is how far the reading is from its own 10-year average: 100 means the furthest from that average, not necessarily a record price or rate.
This issue
The others: Expected inflation 73 (warm) and Yield curve 41 (neutral).
Hot and cold describe position, not good or bad: warm does not mean a fall is coming, and an extreme reading does not mean a quick reversal. We describe history only, with no buy or sell advice.
Where it stands now
Not combined
These are not combined into one number because “high” means different things: high yields mean borrowing costs more, while a high yield curve means long-term rates are far above short-term rates. They describe different things, so each indicator gets its own chart.
What it is linked to
Real ratetoUS 10-yr yieldCommon explanation: Cause · same direction
10-year yield = real rate + inflation expectations (an identity)
This issue: Real rate at 100 (hot), US 10-yr yield at 91 (hot) — both above normal, in line with the common explanation.
Supported by the dataAgreement +0.91 · in step in 9 of 9 5-year periods
Expected inflationtoUS 10-yr yieldCommon explanation: Cause · same direction
10-year yield = real rate + the inflation markets expect (an identity)
This issue: Expected inflation at 73 (warm), US 10-yr yield at 91 (hot) — both above normal, in line with the common explanation.
Supported by the dataAgreement +0.59 · in step in 7 of 9 5-year periods
US 10-yr yieldtoGerman 10-yr yieldCommon explanation: Ripple · same direction
Global investors compare government bonds across countries, so rising US yields pull others along
This issue: US 10-yr yield at 91 (hot), German 10-yr yield at 100 (hot) — both above normal, in line with the common explanation.
Supported by the dataAgreement +0.85 · in step in 12 of 12 5-year periods
Fed funds ratetoYield curveCommon explanation: Cause · opposite direction
Rate hikes lift short-term rates first, flattening or inverting the curve
This issue: Fed funds rate at 72 (warm), Yield curve at 41 (neutral) — at least one is in the neutral range (40–60), so we make no call this issue.
Supported by the dataAgreement +0.77 · in step in 46 of 48 5-year periods
US 10-yr yieldtoUS valuationCommon explanation: Cause · opposite direction
Higher rates make future profits worth less today, weighing on valuations
This issue: US 10-yr yield at 91 (hot), US valuation at 99 (hot) — both above normal, not in line with the common explanation (this is an inverse link).
Weak or inconsistentAgreement +0.37 · in step in 24 of 49 5-year periods
Policy ratestoGerman 10-yr yieldCommon explanation: Cause · same direction
Policy rates set the short end and pull long-term rates along (ECB → German bonds)
This issue: Policy rates at 85 (hot), German 10-yr yield at 100 (hot) — both above normal, in line with the common explanation.
Weak or inconsistentAgreement +0.40 · in step in 6 of 12 5-year periods
German 10-yr yieldtoEUR/USDCommon explanation: Cause · euro strengthens
When European rates rise relative to US rates, money flows into the euro
This issue: German 10-yr yield at 100 (hot), EUR/USD at 73 (warm) — both above normal, in line with the common explanation.
Weak or inconsistentAgreement +0.35 · in step in 0 of 3 5-year periods
Over the whole history the direction matches the common explanation but is weak, and in most periods the direction did not match, so the link counts as unstable.
Yield curvetoLeading indexCommon explanation: Cause · same direction
An inverted curve usually signals tight monetary policy and expected rate cuts, and the economy weakens afterwards; inversions have often come before recessions
This issue: Yield curve at 41 (neutral), Leading index at 42 (neutral) — at least one is in the neutral range (40–60), so we make no call this issue.
Weak or inconsistentAgreement +0.22 · in step in 28 of 51 5-year periods