Bond investors are driving a wedge into the Treasury market in anticipation of slower economic growth and faster inflation, spurring demand for shorter-term Treasuries at ever-lower yields while longer-term yields drift higher. The next test comes with Friday data expected to show inflation remains elevated.
Bond investors anticipate slower growth and faster inflation, creating a steeper yield curve in the Treasury market: shorter-term Treasury yields are decreasing while longer-term yields increase. Upcoming inflation data will be a key indicator.
