Comments on: The Fed’s Box: Quantitative Easing and Rising Long-Term Interest Rates http://taxesandbudget-blog.ncpa.org/the-feds-box-quantitative-easing-and-rising-long-term-interest-rates/ Insights on Taxes, Economic Policy, Federal Budget | NCPA Fri, 20 Nov 2009 19:34:42 -0600 http://wordpress.org/?v=2.8.4 hourly 1 By: Scott Grannis http://taxesandbudget-blog.ncpa.org/the-feds-box-quantitative-easing-and-rising-long-term-interest-rates/comment-page-1/#comment-10316 Scott Grannis Wed, 24 Jun 2009 22:54:00 +0000 http://taxesandbudget-blog.ncpa.org/?p=1026#comment-10316 I think rising inflation expectations are a much better explanation for why bond yields are up, and the bond market itself offers the proof. 10-yr Treasury yields are up 160 bps from their low at the end of last year, while 10-yr TIPS yields are down about 10 bps over the same period. That means that the expected annual inflation rate over the next 10 years has risen by 170 bps, which is more than the increase in 10-year Treasury yields. I think rising inflation expectations are a much better explanation for why bond yields are up, and the bond market itself offers the proof. 10-yr Treasury yields are up 160 bps from their low at the end of last year, while 10-yr TIPS yields are down about 10 bps over the same period. That means that the expected annual inflation rate over the next 10 years has risen by 170 bps, which is more than the increase in 10-year Treasury yields.

]]> By: Nemo http://taxesandbudget-blog.ncpa.org/the-feds-box-quantitative-easing-and-rising-long-term-interest-rates/comment-page-1/#comment-10314 Nemo Wed, 24 Jun 2009 15:33:32 +0000 http://taxesandbudget-blog.ncpa.org/?p=1026#comment-10314 You forgot to mention one other possibility: Credit risk. :-) You forgot to mention one other possibility:

Credit risk.

:-)

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