In February, the nominal 10-year Treasury rate was 1.50%, which was the lowest monthly average for the 10-year Treasury rate ever. Of course, the nominal rate was nearly 100 basis points (about 0.50%) in the early days of March). At the same time, inflation, according to the CPI, was above 2% for the fourth consecutive month and increasing at its second fastest rate since October 2018.

The combination of the falling nominal 10-year Treasury rate and the rising rate of inflation pushed the change in the real 10-year Treasury rate to -0.80%. This was the lowest level for the year-over-change since  December 2016. Also, it was the 14^th month in a row that the change was negative.

A falling change in the real 10-year Treasury rate tends to be a positive signal for durable goods manufacturing. Declining changes in the real 10-year Treasury rate tend to lead growth in durable goods new orders and capital equipment consumption by a relatively long period of time – historically, between 12 and 24 months. The declining change in the 10-year Treasury rate is a good leading indicator of growth in housing permits, construction spending,  and consumer durable-goods spending as well.

However, if businesses and consumers tighten their spending due to perceived or actual declines in revenue and income, then the typical correlation of a lower 10-year Treasury and growth in the above metrics may not occur.