It’s tempting to dismiss the whole concept of R*

 — the supposed “natural” level of interest rates — 

as yet another pointless theoretical construct by economists suffering from an acute degree of physics envy.

 Tempting, and correct. The idea of a pseudo-perfect neutral interest rate level that neither stimulates or slows a strong economy with stable inflation is an attractive academic proposition, but when has that ever actually happened in practice?

The 10y10y can be seen as a clean-ish indicator of what the bond market thinks its own long-term future looks like.

Robin Wigglesworth Financial Times 30 August 2023

The most important chart in the world | Financial Times (ft.com)

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