The US is facing rising rates pressure in 2021. - Part 2

The US 10-year yield has breached 1.5% in Feb 2021 and is above the level in last Feb.

We did warn about the rising rates pressure last week.

http://sg-stock.blogspot.com/2021/02/the-us-is-facing-rising-rates-pressure.html

For those who don't understand the bond structure, the bond price and yield have an inverse relationship because of the bond calculation method.

Bond Yield: 1.5% (The 10-year yield has been trending up.)

Bond price: $133.98 (The 10-year bond price has been trending down.)

In another perspective, the rises in bond yields can be viewed as an indication of impending inflation.  We had been projecting the 2021 US inflation in October 2020.

http://sg-stock.blogspot.com/2020/10/the-us-inflation-is-coming-part-4.html

Some prominent economists are corroborating our projection now.

https://sg.finance.yahoo.com/news/bank-englands-haldane-warns-inflation-120928077.html

https://sg.finance.yahoo.com/news/rates-may-rise-sooner-tame-124318828.html

Moreover, some commodities' prices have also been trending up, particularly the copper prices since copper is a ubiquitous industrial metal.  Thus, this will provide the oomph to a rise in the producer price index.

The spikes in bond yields had just caused some significant falls in the US stock markets recently.  Therefore, we need to watch out for the movements in bond yields and inflation.  A good indication of such a movement will be the 10-year breakeven inflation rate.

* 10-year breakeven inflation rate = (10-year nominal Treasury yield) - (10-year TIPS yield)

As we can see from the aforementioned chart, the 10-year breakeven inflation rate has been on an upward trend since 2020.  This shows the market expectation of future CPI inflation.