What Trump reflation trade? Why 10-year Treasury yields still could drop to 1% by 2021

While some indicators of the Trump reflation trade — most notably crude oil and the U.S. dollar index — improved in the final week of the first quarter (ending last Friday), others have barely budged.

The most important indicator showing a reversal of the Trump reflation trade is the U.S. Treasury market, where 10-year Treasury yields TMUBMUSD10Y, +1.73% ended the quarter at 2.39%, after ending 2016 at 2.45%. They have slipped again in the first week of the second quarter.

While six basis points isn’t a large decline in long-term interest rates over a quarter, it is still a decline.

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