Although inflation compensation, which has returned as an accurate measure of inflation expectations,
plays a key role in the recent rise in longer - term rates, an earlier post illustrated that the primary reason for the longer decline in the 10 - Year Treasury note rate is the real, or inflation - adjusted,
yield, as measured by the rate on 10 - Year Treasury Inflated Protected Securities.
Although sovereign bonds are expensive at these low
yields, they could have a role to
play in portfolio construction.