Real 10-Year Rate Just 0.4 Percent in July

(Negative) The real 10-year treasury rate was 0.40 percent in July, which was the sixth consecutive month the real rate was below 1.00 percent. The real rate increased just 0.05 basis points from last month. Therefore, the last two months were the lowest the real rate has been since May 2013. 

The year-over-year change in the real rate, -36 basis points, was the 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, construction 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.