Real 10-Yr Treasury Rate Lowest Since May 2013

(Negative) The real 10-year treasury rate was 0.35 percent in June, which was the sixth straight month of decrease. This pushed the real rate to its lowest level since May 2013. The nominal rate was 2.19 percent, which was the lowest it has been since November 2016. The annual rate of inflation fell for the fifth consecutive month and was below 2.0 percent for the second month in a row. 

The year-over-year change in the real rate, -61 basis points, was the highest since February and the second highest since May 2016. A rising year-over-year change in the real 10-year Treasury rate is negative for consumer durable goods spending as those goods become relatively more expensive.

The 10-year treasury rate is good leading indicator of the money supply, housing permits, consutrction spending, and consumer durable goods spending. A falling real interest rate should lead to more housing permits, construction spending, and consumer durable goods spending. This means that the real 10-year treasury rate is now a negative leading indicator for capital spending.