Housing Inflation On Steroids

It doesn’t get any stupider than this. The 10-year UST is now trading below 140 basis points in nominal terms, meaning that the inflation-adjusted (real) yield has dropped to a ludicrous -2.54%.

The latter is based on the one year change in our trusty 16% trimmed mean CPI, which printed at +4.3% Y/Y in October. As shown below, there is nothing like this in the last 30-years of history—the latter suggesting, in fact, that under more normalized conditions the real 10-year yield should be in the +200-to-400 basis points zone.