Analysis of current economic conditions and policy
Major Shocks, Major Real Interest Rate Increases
Big jumps in TIPS after “Liberation Day” and after the US-Iran war’s start.
Figure 1: Change in TIPS yield for 5 year (blue), 10 year (red), 30 year (teal), since 2/17/2026, all in %. Source: Treasury and author’s calculations.
5 thoughts on “Major Shocks, Major Real Interest Rate Increases”
Macroduck
You are highlighting the difference between boring technocratic competence and MAGA bombast.
The public wants things. Technocratics attempt to deliver as much as can be delivered of one thing the public wants, without screwing up everything else the public wants. This kind of balance is boring and annoying.
Demagogues, by contrast, deliver bigly, in splashy, unbalanced fashion. “Look at all the brown people I’ve made miserable so you don’t have to see them in the Lowe’s parking lot!” And “Look at all the brown Iranians I’ve killed so…I’ll get back to you on my reasons for killing brown Iranians.” And “Look at all the aid money I’ve stopped sending to brown people, so they’ll die, but over there where you won’t see them.” And “Look at all the annoying science types I’ve fired so they’ll stop making annoying science that you don’t understand.”
The Gingrich brand of politics – doing things the public (increasingly, the angry, Republican-primary-voting public) wants – has run amuck. It has metastasized into MAGA. Interest rates are a symptom – a truly dangerous symptom – of that deeper problem.
Johnnydean
Give up the maga dialectical term. Its dead and deader.
James
Massive U.S. fiscal deficits mean the market is flooded with debt. Investors demand a higher term premium to absorb this supply amidst geopolitical chaos Higher real borrowing costs impact corporate profits and compress price-to-earnings ratios. Trump and Bessent did that. For the past 50 years, every time Republicans get in office they practice irresponsible governance and drive up the deficit. Republicans are bad for the economy.
Johnnydean
Massive fiscal deficits are just a symptom of excessive debt in general. Capitalism can’t run without them and its been that way for 25 years. The party is simply over. The final liquidation will destroy markets, collapse governments and bring anarchy globally. Especially to the “western powers” who’s decadence is unmatched and never ending attempts to artificially boost a living style foreign to nature.. Another effect will be a global die off as not enough food is produced to feed. What comes afterwards is very much in question. Truly is Kali.
baffling
you could have made that comment yearly over the past five decades, and yet each year it has been proven a false prophecy. not saying things are great. but I have found doomsayers such as yourself are full of garbage most of the time. even after the financial crisis of 2008, your prophecy did not come true. things can go bad. but I am not a buyer of the downfall of western civilization, at least without a nuclear war.
You are highlighting the difference between boring technocratic competence and MAGA bombast.
The public wants things. Technocratics attempt to deliver as much as can be delivered of one thing the public wants, without screwing up everything else the public wants. This kind of balance is boring and annoying.
Demagogues, by contrast, deliver bigly, in splashy, unbalanced fashion. “Look at all the brown people I’ve made miserable so you don’t have to see them in the Lowe’s parking lot!” And “Look at all the brown Iranians I’ve killed so…I’ll get back to you on my reasons for killing brown Iranians.” And “Look at all the aid money I’ve stopped sending to brown people, so they’ll die, but over there where you won’t see them.” And “Look at all the annoying science types I’ve fired so they’ll stop making annoying science that you don’t understand.”
The Gingrich brand of politics – doing things the public (increasingly, the angry, Republican-primary-voting public) wants – has run amuck. It has metastasized into MAGA. Interest rates are a symptom – a truly dangerous symptom – of that deeper problem.
Give up the maga dialectical term. Its dead and deader.
Massive U.S. fiscal deficits mean the market is flooded with debt. Investors demand a higher term premium to absorb this supply amidst geopolitical chaos Higher real borrowing costs impact corporate profits and compress price-to-earnings ratios. Trump and Bessent did that. For the past 50 years, every time Republicans get in office they practice irresponsible governance and drive up the deficit. Republicans are bad for the economy.
Massive fiscal deficits are just a symptom of excessive debt in general. Capitalism can’t run without them and its been that way for 25 years. The party is simply over. The final liquidation will destroy markets, collapse governments and bring anarchy globally. Especially to the “western powers” who’s decadence is unmatched and never ending attempts to artificially boost a living style foreign to nature.. Another effect will be a global die off as not enough food is produced to feed. What comes afterwards is very much in question. Truly is Kali.
you could have made that comment yearly over the past five decades, and yet each year it has been proven a false prophecy. not saying things are great. but I have found doomsayers such as yourself are full of garbage most of the time. even after the financial crisis of 2008, your prophecy did not come true. things can go bad. but I am not a buyer of the downfall of western civilization, at least without a nuclear war.