“…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
“…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
“Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
“…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
“Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
“…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
“…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
“Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
“Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
“There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
“Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
“…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
AI Summary.US consumer prices rose 3.7% year over year in September, up from 3.4% in August and above economists' 3.6% forecast, with core prices excluding food and energy up 2.6%. Prices rose faster than average hourly earnings, which increased 3%, meaning many Americans' real incomes are falling.
Konrad PutzierWall Street Journal
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Inflation accelerated in September, rising to 3.7% annualized from August’s 3.4%. Real average hourly earnings fell .7% year over year.
Is inflation accelerating faster than wages, cutting real incomes?
Core argument: U.S. consumer prices rose 3.7% in September from a year earlier, the Labor Department said, up from August’s 3.4% and above the 3.6% expected by economists surveyed by The Wall Street Journal.
Consumer prices were up 3.7% in September from a year earlier, the Labor Department said Wednesday, hotter than August’s gain of 3.4%. That was above the 3.6% rise expected by economists surveyed by The Wall Street Journal. Core prices excluding food and energy rose 2.6%, above forecasts for a 2.5% increase. Month over month, core prices rose by 0.3%, surprising economists who had expected a 0.2% increase. High prices have been a political flashpoint for Americans, who have grown fed up with five years of inflation. Prices rose much faster in September than average hourly earnings, which increased 3% from a year earlier. That means many Americans are seeing their real incomes fall.
Takeaways by Macro Roundup® AI
U.S. consumer prices rose 3.7% in September from a year earlier, the Labor Department said, up from August’s 3.4% and above the 3.6% expected by economists surveyed by The Wall Street Journal.
Core prices excluding food and energy rose 2.6% year over year in September, above forecasts of 2.5%, and 0.3% month over month against expectations of 0.2%.
September prices rose much faster than average hourly earnings, which increased 3% from a year earlier, meaning many Americans are seeing real incomes fall.
Related Articles:
Do Voters Punish Inflation or Pay Cuts? Inflation and Real Wages in U.S. Elections— An analysis of U.S. counties estimates that where wages grew faster than prices, voters supported the incumbent party more, while counties with larger real wage losses than average shifted more toward the opposition. A one-standard-deviation larger real wage loss is associated with shifts of roughly 0.10 and 0.19 percentage points in vote share and margin.
Sticky Wage Norms and the Real Wage Cost of Unexpected Inflation— Firms set nominal wage increases by round-number rules—about 42% of increases below 6% fell within 0.01 percentage points of a whole or half number—and these rules rose only from about 2.7% to 3.5% as inflation peaked near 7%, contributing to falling real wages for job stayers.
The Cost of Money is Part of the Cost of Living: New Evidence on the Consumer Sentiment Anomaly— Variation in the University of Michigan consumer sentiment index that inflation and unemployment cannot explain is strongly correlated with growth in consumer borrowing costs, such as mortgage and car loan rates. The authors estimate that including interest payments and homeownership costs in the consumer price index would raise measured inflation from 3% to 9%.
AI Summary.An artificial intelligence investment boom that is insensitive to interest rates is drawing capital, electricity and labor away from rate-sensitive sectors such as housing and autos, which the author argues will force the Federal Reserve to hold rates higher for longer. The durable fix is expanding power, chip and infrastructure supply.
Torsten SløkApollo
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Sløk warns the rate-insensitive AI buildout has triggered unbalanced growth in the US economy by crowding out capital, electricity, and labor from vulnerable sectors like housing and autos.
Does a rate-insensitive AI boom force the Fed to keep rates higher?
Core argument: The AI boom’s insensitivity to interest rates is draining capital, power and labor from rate-sensitive sectors such as housing and autos, producing a “Dutch disease” dynamic in the US economy.
AI's rate-insensitive boom is draining capital, power and labor from vulnerable sectors like housing and autos. Trapped between inflation driven by the AI boom and weakness in rate-sensitive industries, the Fed will have to keep interest rates higher for longer. Because monetary policy cannot resolve this sectoral imbalance, the only durable fix is expanding the supply of power, chips and infrastructure.
Takeaways by Macro Roundup® AI
The AI boom’s insensitivity to interest rates is draining capital, power and labor from rate-sensitive sectors such as housing and autos, producing a “Dutch disease” dynamic in the US economy.
Caught between AI-driven inflation and weakness in rate-sensitive industries, the Federal Reserve will have to hold interest rates higher for longer.
Monetary policy cannot resolve the imbalance between AI and rate-sensitive sectors, leaving expansion of the supply of power, chips and infrastructure as the only durable fix.
Related Articles:
Financing the AI Buildout— The authors estimate roughly 57 gigawatts of operating US data center capacity against a planned development pipeline of about 509 gigawatts, which is not a completion forecast since projects may be delayed, scaled back, or abandoned. Their central scenario has 182.8 gigawatts of added capacity becoming operational through 2032, 117.2 gigawatts completed later, and 226.9 gigawatts never completed.
AI Set to be Largest CapEx Cycle Ever … and Soon Majority Externally Financed— Hyperscaler and data-center investment is tracking toward $1.5tn annually by 2030, which in real terms would exceed the 2005-06 housing boom, the 1990s fiber peak, and the 1882 railroad peak combined. External debt and equity are projected to fund close to 90% of the buildout, making it dependent on credit markets.
The Macro Implications of the AI Capex Boom— Artificial intelligence capital spending is estimated to add roughly 1.4 percentage points to US growth in one year and about 1.5 points the next, comparable to business investment's contribution during the tech bubble. A material part of that estimate reflects profits at Nvidia and a few other chipmakers that are unlikely to be recycled back into the economy.
AI Summary.The gap between French and German 10-year government bond yields exceeded 140 basis points, up from 40–50 basis points, which the author attributes to political choices favoring pensioners over bondholders, including a suspended pension reform leaving the minimum retirement age near 62. French over-65s hold higher average incomes than working-age people.
Hanno LustigThe Two Cents
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France has signaled that pensioners are the senior claimants on government revenues. In 2026, private investors must absorb net bond issuance equal to 7.5% of GDP, after years when ECB purchases exceeded issuance.
Why has France's borrowing cost gap with Germany widened?
Core argument: The French OAT-Bund 10-year spread exceeded 140 basis points in mid-2025, up from 40–50 basis points between 2022 and June 2024, which Lustig attributes to political decisions prioritizing pensioners over bondholders.
France’s 10-year spread over Germany has risen above 140bp, from 40–50bp before mid-2024. France has repeatedly signaled that pensioners are senior claimants on government revenues: pension reforms have been weakened or reversed, while governments trying to restrain pension spending have fallen. The minimum retirement age is now 62 years and 9 months, and French over-65s have higher average incomes than the working-age population. Meanwhile, ECB purchases exceeded French net bond issuance in five years from 2015–22, so private investors were net sellers of French bonds; in 2026 they must absorb net issuance equal to 7.5% of GDP. The 10-year (r-g) gap has swung from −3.9pp in October 2020 to +1.9pp. French insurers and pension funds’ share of negotiable government debt has fallen from about 25% in 2014 to under 11%, while nonresidents’ share has risen to 57.5%.
Takeaways by Macro Roundup® AI
The French OAT-Bund 10-year spread exceeded 140 basis points in mid-2025, up from 40–50 basis points between 2022 and June 2024, which Lustig attributes to political decisions prioritizing pensioners over bondholders.
France’s legal minimum retirement age remains frozen at 62 years and 9 months for men — the lowest in the Eurozone except Bulgaria — after Prime Minister Lecornu suspended the 2023 pension reform, and French over-65s hold higher average incomes than the working-age population.
French insurers and pension funds’ share of France’s negotiable state debt fell from about 25% in 2014 to under 11%, non-residents hold 57.5% of OATs, and private investors are projected to absorb 7.5% of GDP in net issuance in 2026.
Related Articles:
Soaring Yields Find Europe’s Weak Spot— A rapid rise in long-term US Treasury yields has highlighted vulnerabilities elsewhere, notably France, where risks are elevated. Because France is in the euro zone, any crisis there would extend to the currency area, and European stocks have sold off alongside a weakening euro.
France Seeks To Rein In Pensions And State Salaries In 2027— France plans to narrow its budget deficit to 5% of GDP by cutting state spending, capping increases to pensions and civil servant salaries, and raising taxes. Deteriorating public finances have left France borrowing at higher interest rates than Italy and Greece, with 10-year bond yields reaching their highest since 2002.
Global Debt Report 2026— Gross central government borrowing across OECD countries rose 7% to a record $17tn, about 23% of GDP, and is projected to reach roughly $18tn, or 24% of GDP. The United States and Japan account for close to 80% of the area's refinancing requirements, with the US share rising from 57% to 70%.
AI Summary.French government borrowing costs now exceed the country's nominal income growth by about 2 percentage points, the most unfavorable gap between borrowing costs and growth in the rich world. By contrast, Spanish and Greek bond yields remain about 2 percentage points below their income growth rates.
Matthew KleinThe Overshoot
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The change in a country’s interest rate, Klein argues, should be measured against the change in nominal income growth. By that metric, France has moved from “core Europe” into the periphery – while Italy, Spain and especially Greece have moved in the opposite direction.
Do French borrowing costs now exceed its income growth?
Core argument: France’s borrowing costs exceeded its nominal income growth rate by about 2pp as of 2026Q2, and by roughly 3pp at current yields, the most unfavorable such spread in the rich world.
The problem for France is that its bond yields are surging even as its nominal income growth has slowed relative to the 2017-2019 pace, to the point that, almost uniquely among rich countries, borrowing costs there now substantially exceed growth rates. In fact, the spread between French sovereign borrowing costs and French growth rates is now the most unfavorable anywhere in the rich world. The French economy was not quite growing by 2% a year in euro terms as of 2026Q2, which was even worse than the anemic 3% yearly average nominal growth rate recorded in 2017Q1-2019Q4. As of 2026Q2, France’s cost of borrowing was therefore about 2pp higher than its income growth rate. (At current yields, the penalty is more like 3pp.) By contrast, Spanish and Greek bond yields are still about 2pp lower than their income growth rates.
Takeaways by Macro Roundup® AI
France’s borrowing costs exceeded its nominal income growth rate by about 2pp as of 2026Q2, and by roughly 3pp at current yields, the most unfavorable such spread in the rich world.
French nominal growth was running just under 2% a year in euro terms as of 2026Q2, below the 3% yearly average recorded in 2017Q1–2019Q4, even as French bond yields surged.
Spanish and Greek bond yields remain about 2pp below their nominal income growth rates, in contrast to France’s unfavorable gap.
Related Articles:
Soaring Yields Find Europe’s Weak Spot— A rapid rise in long-term US Treasury yields has highlighted vulnerabilities elsewhere, notably France, where risks are elevated. Because France is in the euro zone, any crisis there would extend to the currency area, and European stocks have sold off alongside a weakening euro.
France Seeks To Rein In Pensions And State Salaries In 2027— France plans to narrow its budget deficit to 5% of GDP by cutting state spending, capping increases to pensions and civil servant salaries, and raising taxes. Deteriorating public finances have left France borrowing at higher interest rates than Italy and Greece, with 10-year bond yields reaching their highest since 2002.
Global Debt Report 2026— Gross central government borrowing across OECD countries rose 7% to a record $17tn, about 23% of GDP, and is projected to reach roughly $18tn, or 24% of GDP. The United States and Japan account for close to 80% of the area's refinancing requirements, with the US share rising from 57% to 70%.
AI Summary.Second-quarter real GDP growth was revised up 0.7 percentage points to +2.2% at an annual rate, reflecting upward revisions to consumption (to +3.8%) and investment (to +4.6%). Private fixed investment was revised up to +9.0%, driven by data center spending in nonresidential structures.
Jan Hatzius, David Mericle, Alec Phillips, Ronnie Walker, et al.Goldman Sachs
Date Posted:
GS forecasts that the FOMC will not hike in October, will do one 25bp hike in December and “ultimately conclude that additional rate hikes are unnecessary.”
What drove the upward revision to second-quarter GDP growth?
Core argument: U.S. real GDP growth in Q2 was revised up 0.7pp to +2.2% quarter-over-quarter annualized, led by upward revisions to consumption (+0.4pp to +3.8%) and investment (+1.9pp to +4.6%).
Real GDP was revised up by 0.7pp to +2.2% in Q2 (quarter-over-quarter annualized), largely reflecting upward revisions to consumption (+0.4pp to +3.8%) and investment (+1.9pp to +4.6%) growth. The strength in consumer spending in Q2 likely continued to reflect the boost to consumer cashflow from larger-than-usual tax refunds, but we continue to expect consumer spending growth to slow somewhat in 2026Q4 as the fiscal support fades and the headwind from higher energy prices remains. Stronger investment growth reflected an upward revision to private fixed investment (+0.5pp to +9.0%), driven by data center investment in the nonresidential structures category (+1.9pp to +0.1%), and an upward revision to the contribution from inventories (+0.2pp to -0.5pp).
Takeaways by Macro Roundup® AI
U.S. real GDP growth in Q2 was revised up 0.7pp to +2.2% quarter-over-quarter annualized, led by upward revisions to consumption (+0.4pp to +3.8%) and investment (+1.9pp to +4.6%).
Private fixed investment growth in Q2 was revised up 0.5pp to +9.0%, driven by data center investment in nonresidential structures, revised up 1.9pp to +0.1%, alongside a +0.2pp revision to the inventory contribution, to -0.5pp.
Q2 consumer spending strength likely reflected the cashflow boost from larger-than-usual tax refunds, with spending growth expected to slow somewhat in 2026Q4 as fiscal support fades and higher energy prices remain a headwind.
Related Articles:
The Fed Finally Gets It— Federal Reserve officials' assessed risks to their employment and price stability mandates had tended to move together rather than inversely, suggesting common forces were driving both. That pattern has now shifted, with officials more optimistic on growth and employment and less concerned about downside risks than before the pandemic.
The Diesel Shock Is a Core Inflation Shock— The US Gulf Coast diesel crack spread cleared $100 per barrel for the first time on record, against a normal range of $15 to $30. Because diesel is an intermediate input embedded in the delivered cost of nearly every physical good, the author argues the increase migrates with a lag into core goods and services inflation.
Warsh’s Fed Soars Like a Hawk Into a Hiking Cycle— The Federal Reserve described its rate increase as having "removed a dose of accommodation" and as a start to showing it is serious, implying the policy rate remains accommodative and further increases are coming. Market-implied expectations have shifted to price in three additional hikes before the tightening cycle ends.
AI Summary.Demand and supply curves estimated from pre-pandemic data imply relatively flat demand curves in the US and euro area, so adverse supply shifts would produce large output losses but comparatively little inflation. The authors argue explaining the observed combination of high inflation and output requires outward demand shifts, including accommodative monetary policy alongside fiscal expansion.
Domenico Giannone and Giorgio PrimiceriBookings Papers on Economic Activity
Date Posted:
Is Database:
Database
Giannone and Primiceri revisit the relative role of supply vs. demand shocks in generating the post-Covid inflation. Because aggregate demand curves estimated from pre-pandemic data are flat, supply shocks alone would not have generated large inflation in the absence of added demand stimulus.
Did outward demand shifts, not supply shocks alone, drive recent inflation?
Core argument: Demand curves estimated from pre-pandemic US and euro-area data are relatively flat, reflecting central banks’ strong pre-pandemic responses to inflation, so adverse supply shifts produce large output losses but comparatively little inflation.
Demand and supply curve slopes are estimated from pre-pandemic data using the essentially definitional restriction that supply shocks move prices and output in opposite directions along demand curves, while demand shocks move them together along supply curves; the plotted slopes represent Bayesian posterior medians rather than uniquely identified estimates. The estimated demand curves are relatively flat in both the US and euro area [Figure 7], reflecting the central banks’ strong pre-pandemic responses to inflation. With those slopes, adverse supply shifts cause large output losses but comparatively little inflation. [To successfully explain] the combination of inflation and output observed in 2022 therefore requires demand to shift outwards too. Strong demand, including unusually accommodative monetary policy [on top of strong fiscal expansion], cushioned the output losses while increasing inflation [Figure 7]. In 2021–22, both inflation and GDP as subsequently revised exceeded forecasts in the US and euro area. That combination is suggestive of unexpectedly strong demand, whereas an adverse supply surprise alone would raise inflation but lower output. [Figure 9].
Takeaways by Macro Roundup® AI
Demand curves estimated from pre-pandemic US and euro-area data are relatively flat, reflecting central banks’ strong pre-pandemic responses to inflation, so adverse supply shifts produce large output losses but comparatively little inflation.
Explaining the 2022 combination of inflation and output requires an outward shift in demand, with strong demand — including unusually accommodative monetary policy atop fiscal expansion — cushioning output losses while raising inflation.
In 2021–22, both inflation and GDP as subsequently revised exceeded forecasts in the US and euro area, a combination suggestive of unexpectedly strong demand, since an adverse supply surprise alone would raise inflation but lower output.
Related Articles:
Are Government Bonds Safe in Times of War and Pandemic?— Government bonds severely underperform in wartime, in absolute terms and relative to equities, housing, and economic growth, unlike in financial crises when bonds tend to outperform stocks. The U.S. and U.K. reduced war-driven debt-to-GDP ratios without explicit default, using surprise inflation and financial repression that shifted fiscal burdens onto bondholders.
Why Did Inflation Rise And Fall In 2021-24? Channels And Evidence From Expectations— Across countries, unexpectedly higher government deficits relative to earlier International Monetary Fund forecasts are associated with unexpectedly higher inflation, measured by each factor's contribution to the increase in public debt, a relationship the author finds statistically significant. This evidence is consistent with a fiscal channel for inflation.
Fiscal Influences on Inflation in OECD Countries, 2020-2022— Across 21 economies, the authors find that headline and core inflation responded positively to a measure of government spending increases scaled by pre-pandemic debt-to-GDP and average debt duration. Estimated coefficients of 0.4–0.5 suggest 40–50% of the extra spending was financed through inflation, with the rest through conventional public finance.
AI Summary.The Institute of International Finance reports global debt as a share of output rose less than 10 percentage points between 2018 and mid-2026, peaking at 337% in early 2021 before falling 27 percentage points by the end of 2023. Inflation eroded the debt burden, as it did in the UK after the Second World War.
Martin WolfFinancial Times
Date Posted:
Is Database:
Database
Wolf notes that the global debt-to-GDP ratio rose by less than 10pp btw 2018 and June 2026: after peaking at 337% in early 2021, it fell by 27pp by the end of 2023, as inflation boosted nominal GDP and eroded the value of existing debt.
Does inflation reduce the global debt burden?
Core argument: IIF data show the global debt-to-output ratio reached a post-Covid peak of 337% in early 2021 before falling by 27 percentage points by the end of 2023, with inflation identified as the force that eroded it.
The IIF shows that between 2018 and June 2026, the rise in the ratio of global debt to output was less than 10 percentage points. The story is striking: the ratio reached a post-Covid peak of 337% in early 2021, before falling by 27 percentage points by the end of 2023. What was this magical “debt-buster”? Good old-fashioned (and supposedly “unexpected”) inflation. This is — to put it mildly — not the first time inflation has wiped out debt. It was, to take one of countless examples, an important part of the UK’s elimination of its post-second-world-war debt. For countries able to print the money in which their debt is denominated, that is often what happens.
Takeaways by Macro Roundup® AI
IIF data show the global debt-to-output ratio reached a post-Covid peak of 337% in early 2021 before falling by 27 percentage points by the end of 2023, with inflation identified as the force that eroded it.
Between 2018 and June 2026, the IIF shows the ratio of global debt to output rose by less than 10 percentage points.
Inflation has wiped out debt before, forming an important part of the UK’s elimination of its post-second-world-war debt, and often does so for countries able to print the currency in which their debt is denominated.
Related Articles:
Are Government Bonds Safe in Times of War and Pandemic?— Government bonds severely underperform in wartime, in absolute terms and relative to equities, housing, and economic growth, unlike in financial crises when bonds tend to outperform stocks. The U.S. and U.K. reduced war-driven debt-to-GDP ratios without explicit default, using surprise inflation and financial repression that shifted fiscal burdens onto bondholders.
The Coming Great Repression?— Across countries and over time, higher public debt burdens are associated with lower relative returns on government bonds, the opposite of standard risk-premium predictions. The authors estimate financial repression—making banks captive bond buyers and loading them with low-return reserves—contributed 90.7 percentage points of GDP to Britain's postwar debt reduction, versus 20.3 from surprise inflation.
Global Debt Report 2026— Gross central government borrowing across OECD countries rose 7% to a record $17tn, about 23% of GDP, and is projected to reach roughly $18tn, or 24% of GDP. The United States and Japan account for close to 80% of the area's refinancing requirements, with the US share rising from 57% to 70%.
AI Summary.Because investors can buy bonds across borders, an investment boom in one country such as the United States can draw in loanable funds from abroad and push up interest rates in other nations. The linkage is not one-for-one, since investors also weigh expected exchange-rate changes and the resulting capital gains or losses.
Paul KrugmanKrugman Wonks Out
Date Posted:
The nominal 10-year Treasury yield is ~ where it was during the mid-2000s housing boom, but below its level during the late-1990s and early-2000s technology boom. Krugman asks, “If we’re now looking at an even bigger investment boom, why wouldn’t we expect to see interest rates at least that high?”
Does an investment boom in one country raise interest rates abroad?
Core argument: Because investors can buy bonds across borders, an investment boom in the United States draws loanable funds from other nations and pushes their interest rates up as well.
Investors can buy bonds across borders, so an investment boom in the United States can draw in loanable funds from other nations and drive up their interest rates. The international linkage between interest rates isn’t always one-for-one. That’s mainly because investors deciding which nation’s bonds to buy don’t just look at interest rates -- they also take into account expected changes in exchange rates. For example, there was a sharp rise in U.S. interest rates in the early 1980s that was only partially matched by a rise in German rates. The reason was that this was also a period of an extremely strong dollar, which many investors believed (correctly) would prove temporary. So German investors buying U.S. bonds had to set the high interest rates they could earn against the capital losses they were likely to experience when the dollar came back to earth.
Takeaways by Macro Roundup® AI
Because investors can buy bonds across borders, an investment boom in the United States draws loanable funds from other nations and pushes their interest rates up as well.
The international linkage between interest rates is not always one-for-one, mainly because investors choosing among nations’ bonds weigh expected exchange rate changes alongside interest rates.
The sharp rise in U.S. interest rates in the early 1980s was only partially matched by German rates, as German investors buying U.S. bonds set high yields against likely capital losses when the strong dollar fell back.
Related Articles:
Financing the AI Buildout— The authors estimate roughly 57 gigawatts of operating US data center capacity against a planned development pipeline of about 509 gigawatts, which is not a completion forecast since projects may be delayed, scaled back, or abandoned. Their central scenario has 182.8 gigawatts of added capacity becoming operational through 2032, 117.2 gigawatts completed later, and 226.9 gigawatts never completed.
America’s Risky Debt: What Markets See That Policymakers Don’t— Two market-based measures suggest the safety premium investors pay to hold US Treasuries has compressed toward zero and at times reversed: the spread between top-rated corporate bonds and Treasuries after stripping out default risk, and the gap between currency-hedged foreign G10 government yields and Treasury yields at the same maturity, where longer-maturity comparisons now favor foreign bonds.
Don’t Draw The Wrong Conclusion From Treasury Yields— Ten-year real yields equal the average expected overnight rate over the next decade plus a term premium, and fiscal credibility or debt sustainability concerns would show up as a higher term premium. With the term premium and inflation expectations contained, the increase in bond yields reflects higher expected long-term overnight rates.
