Real rate → US 10-⁠yr yield

Common 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.

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

Where the two indicators stand this issue

Real rate: Now 2.89%. US 10-⁠yr yield: 2.09 percentage points above its 10-year average.

Tests

Does this link hold up?

Common explanation10-year yield = real rate + inflation expectations (an identity)Source: Federal Reserve Board, “The Treasury Tantrum of 2023” (2024).
Tested against our dataAgreement between the positions of Real rate and US 10-⁠yr yield (same month), measured in the direction of the common explanation: +0.91. Looking at every 5-year period (shifted one year at a time), the two moved in that direction in all 9, but that does not mean they always will; data start only in 2012. Supported by the data
Periods when it did not holdAcross 9 5-year periods, out of step in none.

History

The two lines, overlaid

Data: Federal Reserve H.15 (DFII10), via FRED (Federal Reserve Bank of St. Louis); Federal Reserve H.15, via FRED (Federal Reserve Bank of St. Louis). Positions: our calculation.

Real rateUS 10-⁠yr yield

Time lag

At what lag do they match best?

Longer bar = moves more in the direction of the common explanation (the number is the agreement).

same month+0.91
3-month lag+0.84
6-month lag+0.76
9-month lag+0.67
12-month lag+0.59
18-month lag+0.39

Limits

What this card cannot tell you

Moving together does not prove that one causes the other.
Links change over time; periods when this one did not hold are listed in full.
This is the historical record, not a forecast.

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