Treasury
yields have marched higher in the last two months, prompting fear for some
investors.
Investors
will get another look at the health of the economy this week when the
government releases its first estimate for third-quarter gross domestic
product, followed by personal-consumption expenditures on Oct. 29. Unexpectedly
strong readings could send Treasury yields on a fresh run higher, although
recent data have suggested that, even with the economy growing at a healthy
clip, inflation pressures remain muted.
U.S.
government bond yields broke out to multiyear highs in October.
Meanwhile,
bets have stacked up among traders that the Fed will keep tightening monetary
policy with its rate-increase campaign.
Yet
even as bond yields have risen, inflation expectations have remained subdued.
The price of funds offering bond investors protection against inflation has fallen.
Some
analysts say that reflects bets that inflation, while on the rise, isn’t in
danger of spiking soon.
That
could help fuel further gains for bond proxies, which have outperformed broader
stock indexes in October.
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