Despite prices rising every month and the CPI showing over 5 percent inflation over the past year, treasury yields still are not rising. The 10 year still returns less than 1.3 percent, so at current levels of inflation, your real return could be negative 3.5 percent. Why would an investor do that?
Daniel Lacalle, the chief economist at the Tressis hedge fund, says it’s not really investors doing it, but the Federal Reserve. It’s buying the bonds to keep the yield artificially low. NTD asked Lacalle how much that is driving up prices this year.