This Friday, the unexpected non-farm payrolls data did not extinguish investors' fear of rate hikes, and the unexpected wage increase made many investors price in the Fed's July rate hike as a foregone conclusion. U.S. Treasury bonds fell rapidly after the data was released, with the 10-year and 30-year Treasury yields rising to their highest levels this year.
Meanwhile, yields on inflation-protected bonds, which represent real interest rates, are surging. The nominal yield on benchmark 10-year Treasury bonds, or TIPS, adjusted for inflation, rose to 1.82% on Friday, the highest level since 2009.
The real interest rate usually represents the real investment return of the real economy and the real financing cost of enterprises. It has an important impact on the behavior of micro-entities, allocation of financial resources and asset pricing, and has received widespread attention from policymakers and market participants.
Rising real yields on ultra-low-risk government bonds will reduce the attractiveness of other assets, while higher borrowing costs will also have a negative impact on the corporate sector.