Saturday , September 18 2021
Home / Econbrowser - James Hamilton / Real Borrowing Costs for the US Treasury: May 2021

Real Borrowing Costs for the US Treasury: May 2021

Summary:
As of May 2021, the nominal 10 year Treasury rate is 1.6%. The real rate is -0.9%. Figure 1: Nominal 10 year Treasury yield (blue), 10 year TIPS (red), both in %. NBER recession dates shaded gray; latest recession assumed to end 2020M04. Source: Federal Reserve via FRED, Treasury, and NBER. It’s noteworthy that — despite the runup in real and particularly nominal rates — May 2021 real rates are still below anything experienced in the the recovery from the Great Recession, and only slightly higher than the all time lows recorded in August 2020 and January 2021 (monthly averages of daily data). Hence, this seems  an ideal time for the Federal government to lock in interest rates.

Topics:
Menzie Chinn considers the following as important: ,

This could be interesting, too:

Menzie Chinn writes August CPI – Nowcasts

Menzie Chinn writes Messages from the (Bond) Market

Menzie Chinn writes Forecaster Views on the Overheating Hypothesis

Menzie Chinn writes Market Inflation Expectations and Real Rates

As of May 2021, the nominal 10 year Treasury rate is 1.6%. The real rate is -0.9%.

Real Borrowing Costs for the US Treasury: May 2021

Figure 1: Nominal 10 year Treasury yield (blue), 10 year TIPS (red), both in %. NBER recession dates shaded gray; latest recession assumed to end 2020M04. Source: Federal Reserve via FRED, Treasury, and NBER.

It’s noteworthy that — despite the runup in real and particularly nominal rates — May 2021 real rates are still below anything experienced in the the recovery from the Great Recession, and only slightly higher than the all time lows recorded in August 2020 and January 2021 (monthly averages of daily data).

Hence, this seems  an ideal time for the Federal government to lock in interest rates.

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

Leave a Reply

Your email address will not be published. Required fields are marked *