Real 10-Yr Treasury Rate Lowest Since October

(Negative) The real 10-year treasury rate was 0.92 percent in February, which was a slight decline from last month. This was the first month below 1.00 percent since November, and it was the lowest the rate has been since October. The nominal rate currently was 242 basis points, which was virtually unchanged from last month. But, the rate of inflation rose to its fastest rate since February 2012. In February, inflation was above 2.5 percent for the second straight month. Increasing inflation is limiting the rise in the real 10-year treasury rate even though the nominal rate has increased (the real rate is the nominal rate minus inflation). 

The year-over-year change in the real rate increased to -53 basis points. That was the fourth straight month of an increase and the highest it has been since May 2016. 

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.