As the Federal Reserve commences a second round of quantitative easing (QEII), economists continue to debate whether or not the effect will be inflationary.

There’s no need for further debate as far as the market is concerned, however, as interest rates are popping up significantly, driven by concerns of investors anticipating inflation and a weaker value of the U.S. Dollar.

The following table details the changes in constant-maturity Treasury rates since August 1, 2010.  While rates are still comparably low, they have risen significantly in recent weeks.  As noted below in the table (and shown in the graph), three-year Treasury yields are up 80 percent from the low just two weeks ago while two-year notes are up 60 percent.  Even the 30-year Treasury yield has jumped 24+ percent since the end of August.

Unfortunately, I expect further increases in rates as we progress both through QEII and ongoing deficit spending.

For daily Treasury rate yields, go to:

http://www.treas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml

Tags: inflation rate • interest rates