In the wake of the financial crisis, many market watchers asserted that the combination of economic stimulus and the Federal Reserve's zero interest-rate policy would stoke inflation and in turn interest rates.
Seven years later, however, neither scenario has panned out. While concerns over rising interest rates and inflation sparked a sell-off in bonds--and a spike in demand for those with inflation protection--following the election, both interest rates and inflation remain quite low by historical standards. The yield on the 10-year Treasury bond, for example, is just 2.4%. Meanwhile, the most recent year-over-year read on the Consumer Price Index, through November 2016, shows inflation at 1.7%, well below the long-term historical averages of 2.5%-3%. Indeed, in my recent survey of what financial experts are expecting from various asset classes over the next decade, most said that they expected inflation to remain tame--a silver lining in a return forecast that was fairly muted overall.
Christine Benz does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.