Opening Statement from the March 2021 Intelligent Investor (part 1)

Opening Statement from the March 2021 Intelligent Investor (part 1)

Originally published on March 3, 2021 (pre-market release)

Consistent with our forecasts from the Intelligent Investor, the yield on the 10-year US Treasury Note has soared. A couple of months ago we discussed that the 10-year yield was likely to reach 1.50% in 2021 and perhaps 2.00%.

Even though the yield is currently at 1.47%, it still remains quite low from a historical standpoint. But it has been the rapid rise in the yield that has led to increased volatility in the capital markets. It has also led to concerns over inflation. 

Recall that rising inflation is generally bullish for commodities pricing while very bearish for bonds. Incidentally, the impact of inflation on equities is not so clear cut. The soaring 10-year yield has also fueled the recent rally in the USD.

So why has the yield on the 10-year Treasury risen?

Investors expect inflation to increase which could pressure the Fed to raise interest rates...