Real 10-Yr Treasury Under 0.8% for 4th Month

(Positive) The real 10-year treasury rate was 0.71 percent in October 2016, which was an increase of just 1 basis point from last month. The real rate was below 80 basis points for the fourth straight month. A significant reason for this is that that the rate of inflation, while still low historically, has picked up from what it was in 2015. In October, the annual rate of inflation was the highest since October 2014, according to the CPI. 

The year-over-year change in the real rate (the real rate is the nominal rate minus inflation) fell to -117 basis points. That was the sixth consecutive motnh that the year-over-year change declined and the fastest decline since July 2012. 

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 positive leading indicator for capital spending.