10-Year Treasury Yield at 5.31%: Real Rates, Not Inflation

The 10-year Treasury yield closed at 5.31% on Oct 5, its highest since May 2002, and the composition of that move matters more than the level itself. Peel the nominal yield apart and the shift is almost entirely real: the 10-year TIPS yield sits at 2.95% while the 10-year breakeven inflation rate is flat near 2.36%, according to Velox Macro . Investors are not marking up inflation expectations. They are repricing the real rate the Fed is willing to defend, and that is a different market regime with different victims.

Key Takeaways The 10-year Treasury yield hit 5.31% on Oct 5, its highest since May 2002, up from 5.24% a week earlier on Federal Reserve H.15 data. The move is real yields: the 1…