Simple question. Simple answer.
The reason why is that inflation and expectations of future inflation are falling, says Hedgeye U.S. Macro analyst Christian Drake. That’s been our call.
Our Growth, Inflation, Policy (GIP) model, a proprietary tracking algorithm of 30 high-frequency economic indicators, has suggested for some time now that the U.S. economy is headed for Quad 1 (that’s when U.S. growth is heating up and inflation is cooling down).
In the brief video above, Drake breaks down the inflation component of our call and explains what that means for 10-year U.S. Treasury yields. In short, it’s no surprise inflation peaked in mid-February and was closely-followed by falling 10-year Treasury yields one month later.
We called this #Reflation’sRollover.