Weekend Reading: What’s Really Driving Inflation and Bond Yields?

This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
Weekend reading inflation and bond yields Weekend reading inflation and bond yields
Weekend Reading

What components of today’s macroeconomic environment really impact your investments?


Recent market conditions have raised three notable questions that can help provide insight:

📌 What is the relationship between money supply and future inflation? Despite the traditional belief that inflation is a monetary phenomenon, the connection is most notable when money supply changes abruptly, but is not always predictable or helpful to economists.

📌 Does the U.S. government fully control the nation’s inflation rate? Recent figures challenge the idea that the U.S. is immune to inflationary pressures. Inflation rates for several countries, including Canada, Germany, Mexico, the United Kingdom and the U.S., moved closely in tandem, raising questions about the relationship between the U.S. and Western Europe and whether each party influences the other.

📌 What determines real bond yields? Bond yields fluctuate widely despite expectations that they should be steadier than inflation forecasts, suggesting it might be wise to buy bonds when real yields are high and avoid them when real yields are low.

You won’t find the best investment guidance in fear-inducing news headlines or from conflicting economist forecasts. It’s guesstimates on all fronts. For the best course of action amidst puzzling economic environments, follow a comprehensive framework that’s designed to cover any outcome.