Something in all this does not add up

The yield on ten-year Treasury bonds is 1.24%, well below the ten-year breakeven inflation rate of 2.4%.

At the same time, stock markets are flirting with all-time highs.

Something in all this does not add up

Inflation should remain around the Fed’s target. The breakeven inflation rate also seems to be pointing to this scenario.

But that doesn’t explain why the ten-year Treasury rate is so low, suggesting negative real rates over the next decade. In this scenario, however, it would be hard to justify the stock-market buoyancy 

Raghuram G. Rajan Project Syndicate 2 August 2021

https://www.project-syndicate.org/commentary/qe-bond-purchases-decrease-government-debt-maturity-by-raghuram-rajan-2021-08

Raghuram G. Rajan, former governor of the Reserve Bank of India, is Professor of Finance at the University of Chicago Booth School of Business and the author, most recently, of The Third Pillar: How Markets and the State Leave the Community Behind.

Rajan:The Third Pillar: How Markets and the State Leave the Community Behind

https://englundmacro.blogspot.com/2021/02/rajanthe-third-pillar-how-markets-and.html