Monday, September 3, 2012

Long term real rates in the US hit record lows

The long term US real rates have touched a new low. The difference between the 10y zero coupon treasury yield and the 10y zero coupon inflation swap rate is now around -88bp. That's roughly how much you'd lose in real terms per year holding long term treasuries.

10y zero coupon treasury yield -10y zero coupon inflation swap (Bloomberg)

The American savers and retirees all want to thank Bernanke for making their cash savings dwindle even as they lock them up in long-term treasuries to get a "better" nominal rate (see this post on impact of low rates on the economy).
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