10yr is under 1.5% and that yield is down about 15% from the recent highs at the end of March.
So far it looks like the bond market is viewing inflation prospects as transitory and driven primarily by supply chain constraints. There is no quick fix for things like chip shortages that have drastically curtailed new automobile production. Supply chains that were JIT to begin with don't turn on like light switches after falling dormant for a year. For over a decade the trend was to hold no inventory and be as efficient as possible. Works great during normal times, but turns into a giant cluster the minute the global economy gets disrupted and supply chains break down for long periods. This is Macro Econ 101 - demand has outstripped supply for a number of goods (like autos) that figure heavily into inflation calculations.
The reopened economy today (labor, capital, size of market) is not fundamentally different from the pre-Covid economy, where developed economies in the U.S. and Europe struggled to hit a 2% inflation target for roughly 20 years.
The great inflation panic of 2021 will likely get filed alongside the great market crash of December, 2018, in the list of things no one can remember in four years while this bull market has the S&P 500 somewhere in the 6,000s or higher.
So far it looks like the bond market is viewing inflation prospects as transitory and driven primarily by supply chain constraints. There is no quick fix for things like chip shortages that have drastically curtailed new automobile production. Supply chains that were JIT to begin with don't turn on like light switches after falling dormant for a year. For over a decade the trend was to hold no inventory and be as efficient as possible. Works great during normal times, but turns into a giant cluster the minute the global economy gets disrupted and supply chains break down for long periods. This is Macro Econ 101 - demand has outstripped supply for a number of goods (like autos) that figure heavily into inflation calculations.
The reopened economy today (labor, capital, size of market) is not fundamentally different from the pre-Covid economy, where developed economies in the U.S. and Europe struggled to hit a 2% inflation target for roughly 20 years.
The great inflation panic of 2021 will likely get filed alongside the great market crash of December, 2018, in the list of things no one can remember in four years while this bull market has the S&P 500 somewhere in the 6,000s or higher.