Bloomberg Surveillance · Wednesday, August 5, 2026
Market analysis suggests that rising long-term yields are primarily driven by an increase in real yields, not by fears of persistent inflation. This is evidenced by inflation break-evens and swaps pricing inflation around 2% for the next decade. The primary driver for higher real yields is identified as the US deficit.
“So if you look at the market, and this is another thing that again maybe very different than how some people are talking about this. The market is not worried about inflation in the US if I look at the market that assesses that most carefully, which is the market for inflation link security. So if you look at inflation break evens, if you look at inflation swaps, we are pricing inflation to be around two percent for the next two years. We're pricing inflation to be around two percent for the next ten years.”
“The movement that we've had higher in long term yields is in real yields. It's not in the inflation component. It's in the real yield component. And why are they higher. It's what you've been talking about all morning and apparently with your children at bed time, which is and the deficit in this country.”