This week, the shorter end of the Treasury curve plunged with 6-month rates dropping 13bps. Longer-dated Treasury bonds such as 30-year yields were flat on the week.
If we look at the breakdown of Treasury rates this week, we can see that nominal rates declined even though inflation expectations (due to the oil spike) popped. The result was a large drop in real interest rates which drove precious metals higher.
Gold and silver loved the decline in real interest rates and both jumped sharply on the week. Gold is more of a pure play on real interest rates relative to silver which carries an industrial demand component that gold does not have.
This excerpt was taken from the [Weekend Dashboard] report. This note is sent out to members of EPB Macro Research each weekend. To read the full report, click the link below.