The United States Treasury yields are a good indication of where inflation is moving. The Treasury Yields climbed to new highs this week, with the 10 year Treasury Yield climbing above 3.9%, and the 2 year was up to more than 4.6%.
If you buy a six month Treasury Yield you will receive more than 5% annual interest on your money.
The catalyst though for these returns is projected and real inflation, with the producer price index for January coming in much higher than analysts had forecast earlier in the week.
The market is rattled that the Fed will continue to be aggressive in terms of rate hikes. Economists were off by a 0.9% swing in terms of PPI, forecasting a 0.4% rise, but the number came in at negative 0.5%.
Most telling, inflation rose by an unexpected 0.5%. Further interest rate hikes seem inevitable after this week’s data, which would continue the trend over the last several months crushing optimism that the fed might slow down its aggressive policy of interest hikes.