Inflation is currently much higher than treasury bond rates and they are selling fine. Your claim is obviously false. Inflation was 7% the stated goal inflation rate is 2%. The 5 year t bill is 1.7%.
Unless you're a U.S. (net) taxpayer, in which case you're paying yourself back and any interest you might get from the bond is purely illusory.
It's a good deal if you're not a U.S. taxpayer, though.
If you buy a 10y treasury that yields 2%, and yields run to 4%, you'll lose a lot of money and be worse off than if you were in cash
So you can be stuck with 2% today, or wait a short amount of time and possibly get 3-4%
Bonds are mispriced right now. Of course, just my opinion.
At 7% that is still better deal than cash
Assume I have a 10y bond. I can buy it today for 2%. Or, I can sit in cash.
Next month the yield goes up to 3%. I buy it then with my cash. I made more money by holding cash rather than the bond.
Cashflowing assets are only a good inflation hedge after they've been valued using an appropriate discount rate for that inflation.
Both equities and bonds are not valued appropriately for the level of inflation we have, because market participants still believe in transitory. But that belief is being shaken. Personally, I would hold cash over bonds or equity right now.
You cannot hold equities, or bonds which could lose value for such purposes.
Whats remaining to be seen is how long this glut of inflationary pressures continues. At some point, it's much like a bubble - it is inevitable that things cannot continue that way forever.
If we get a few more bad CPI prints, expect rapid rise in longer term treasury yields.
Wouldn't be surprised to see 3% on the 10yr within a few months. Could go even higher if strong evidence of entrenched wage price spiral emerges
However if it does sustain, the $15,000,000,000,000 in debt maturing in less than 5 years will be very hard to refinance at the same interest rates.
From the article:
> For the first four months of the 2022 fiscal year that started Oct. 1, the Treasury reported a deficit of $259 billion, a 65% decline from the year-earlier deficit of $736 billion.
At $120B a month basically the entire deficit is being printed away.
Though you're right that Fed is partially monetizing deficit spending, that money gets reabsorbed over time through coupon payments.
However, Fed typically will repurchase to keep balance sheet stable. Hopefully they actually do QT like they're saying to start reducing the balance sheet