Bond market's pricing suggests U.S. deflation fear is over

10/25/2010 | Bloomberg

Buyers of U.S. government bonds are betting that Federal Reserve Chairman Ben Bernanke will succeed in steering the economy away from deflation and speeding up an increase in consumer prices. Since September, the yield on 30-year Treasurys has moved up as much as one-half percentage point. The spread between fixed-rate 30-year debt and comparable inflation-indexed Treasury Inflation-Protected Securities has widened, suggesting fixed-income investors are expecting to see inflation start warming up, analysts said.

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