US 10-year real yield slips to fresh record low of -0.95%

The yield on the 10-year US treasury inflation-protected security (inflation-adjusted) fell to a new lifetime low of -0.95% on Wednesday after the Federal Reserve reiterated the plan to keep rates at rock bottom for the foreseeable future. 

Chairman Powell said that the monetary policy will be kept accommodative until the Fed is very confident that the turmoil from the pandemic and the economic fallout is behind us. Further, the Fed said that it would extend its programs meant to keep dollar funding readily available to foreign central banks through March 2021. 

Key quotes

The pace of recovery looks like it has slowed.

Recent labor market indicators point to a slowing in job growth, particularly among smaller businesses.

There’s probably going to be a long tail where a large number of people are struggling to get back to work.

With the Fed unlikely to stop pumping money into the ecosystem anytime soon and inflation expectations on the rise, the real or inflation-adjusted 10-year bond yield could continue to slide, boosting gold’s appeal. 

The yield has declined from -0.68% to -0.95% this month alone. Meanwhile, gold has rallied by over 10%. The yellow metal reached a record high of $1,981 earlier this week and was last seen trading near $1,965 per ounce.