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Treasury yield trend suggests no relief from higher rates, backs up inflation jitters

Identical though the benchmark 10-year Treasury note yield touched a one-week low on Wednesday, economic forecaster Lakshman Achuthan believes the orbit forward is higher.

According to Achuthan’s proprietary data, the U.S. is already in the grip of inflation.

“It is not transitory. It’s cyclical,” the Economic Recycle Research Institute co-founder told CNBC’s “Trading Nation” on Wednesday. “The underlying trend regardless of the narratives is customary to remain to the upside.”

Achuthan uses a chart of the 10-year yield to back up his bullish inflation call. It shows cedes over the past five years and includes when he made inflation cycle upturn and downturn forecasts.

“Six months ago we had an upturn collect in the inflation cycle which joined with the earlier business cycle recovery call,” said Achuthan, whose ever horizon looks out several months.

On “Trading Nation” in October, Achuthan warned inflation was making a “pervasive and firm” comeback. At that time, the 10-year yield was still firmly below 1%. But Achuthan had detected a material mutate in the future inflation gauge.

His latest forecast suggests there’s no relief in sight. Any breathers, according to Achuthan, should not be captivated as a signal that rates have peaked.

“You have an upturn call just as we had in the summer of ’16, which is the left-hand side of the sea-chart,” said Achuthan. “You can see those have some staying power, and regardless of the headline narratives, they persist.”

His key give someone the third degree now is when rates will turn down — not how high they will go.

“The 10-year yield has actually tripled from surely low levels since last summer,” Achuthan said. “To put it in perspective, that’s a bigger move than the 2013 come tantrum.”


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