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Real Yields Drive As Breakevens Resist Downward Pressure

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  • The day’s rally in nominal Treasury yields (10Y -5bps) is carried fully in real yields (-6bps) with breakevens firming modestly (+1bp).
  • Potential macro drivers for the day’s move in the breakeven were mixed, with the PMI showing an acceleration in prices paid but selling prices with the joint-slowest increase since Oct’20.
  • The 10Y breakeven has twice struggled to push down to 2.1% in the past two months but is still relatively low compared to the past two years at 2.27%.
  • Further material downward developments here are likely to require signs of continued supply chain improvements, with the NY Fed’s GSCPI significantly off prior highs but still showing disruption at more than 1 standard deviation from average.


10Y breakeven (white) and real yield (yellow)Source: Bloomberg

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  • The day’s rally in nominal Treasury yields (10Y -5bps) is carried fully in real yields (-6bps) with breakevens firming modestly (+1bp).
  • Potential macro drivers for the day’s move in the breakeven were mixed, with the PMI showing an acceleration in prices paid but selling prices with the joint-slowest increase since Oct’20.
  • The 10Y breakeven has twice struggled to push down to 2.1% in the past two months but is still relatively low compared to the past two years at 2.27%.
  • Further material downward developments here are likely to require signs of continued supply chain improvements, with the NY Fed’s GSCPI significantly off prior highs but still showing disruption at more than 1 standard deviation from average.


10Y breakeven (white) and real yield (yellow)Source: Bloomberg