What are the drivers of real rates?
Nominal = real rates + breakevens
breakeven = inflation expectations and what about real rates = ?
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In the traditional framework, nominal yields represent expectations of nominal growth. If actual nominal > expected nominal, then the future share of pie will rise for savers versus consumers. If actual < expected, then current consumers get more pie.
If then, inflation BEs represent inflation expectations, it logically follows that real rates should represent real growth expectations.
EXCEPT... the recent behaviour of the real and inflation sub-component of yields doesn't intuitively look consistent with economic theory thus. Put simply, higher breakevens appear risk-on more often than not; while higher real appears risk-off. So the stockmarket wants higher inflation and lower growth? Unlikely...
To reconcile this absurdity, you need to abandon traditional textbook thinking. Real rates become the market's estimate for central bank hawkishness, ie bad for asset prices across the board. And breakevens become the market's estimate for the profitable slack left in the economy before the central bank starts to need to worry about inflation returning.
"Inflation" becomes "reflation"; while "real" becomes "taper risk".