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Bill Rate

May 28 2021

Real Yields: Interesting, But Not So Helpful

  • May 28, 2021

After Consumer Price Inflation spiked to a 12 1/2-year high of 4.2% in April, there’s been a torrent of analysis decrying the collapse of “real yields”—including the real Treasury-bond yield, real S&P 500 dividend yield, and even the real S&P 500 earnings yield. Since all of these yields already traded at extremely low nominal levels, the inflation adjustment makes every one of them look even worse. For example, the real yield on 10-year Treasuries just sunk to -2.60%, the lowest reading since 1980 (Chart 1).