Debt Desirability

 While the yield on two-year Treasuries is up due to Fed action, and ten-year Treasuries are up due to small observed rises in inflation readings that are overdue – which markets may be reading too much into – inflation-linked rates aren’t up. This means markets currently expect higher future inflation but not better growth. If this occurs, and it may well not, bonds become increasingly attractive at the expense of equities.

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