I thought my March post on crowding out would be my last for a while, but the latest data are startling enough so that I wanted to post this graph of ten year real interest rates. Just for all those people who were worrying about big jumps in rates with government borrowing.
Figure 1: Ten year constant maturity TIPS yields (blue), and ten year constant maturity yield adjusted by ten year mean expected CPI inflation rate (red squares). NBER defined recession date shaded gray. Source: FREDII, Philadelphia Fed Survey of Professional Forecasters, NBER and author’s calculations.
Just in case one wanted to know the exact figures, the TIPS ten year yield in September averaged 0.08% (nominal constant maturity yield at 1.98%). The TIPS ten year constant maturity on 10/6 was 0.18%, the TIPS five year was ….negative 0.57%.