The 10-year Treasury note appears to be a screaming buy both for investors and also for short-term traders.

Currently, the yield on the 10-year Treasury is trading around 4.40%. That is a 16-year high. The spread between the yield on the 10-year Treasury, 4.40%, and the six-month personal consumption expenditure inflation rate of 2.6% is significant. A nearly 2% real return on the world economy’s preeminent risk-free asset is extremely attractive for investors regardless of domicile. Over the past 150 years, the yield on the 10-year has typically meandered between 3%-5%, with a central tendency of 4%.

There is occasional market chatter about the creditworthiness of the United States, but in times of crisis, the world parks savings in dollar-denominated assets. Actions matter, chatter is white noise.

Today, the dollar is strong against a basket of global currencies. There are no signs that China or any other country is abandoning the market for U.S. Treasuries or other federal government debt. It would be against the interest of China or any other country to dump U.S. dollar-denominated assets. China does not want to lose money or make its exports to the U.S. more expensive.

China runs a large trade surplus with the U.S. The U.S. pays for the imports in dollars. If China is paid in dollars and then sells the dollars, the dollar would depreciate in global markets. That is not happening. Moreover, if China sells dollars to buy its own currency, then the Yuan would appreciate making Chinese exports more expensive.

Another spurious explanation for weakness is the very large issuance of Treasuries as the U.S. Treasury Department rebuilds its balance sheet following the debt ceiling impasse.

It is true that the federal debt is large and growing larger and that the Federal Reserve is withdrawing liquidity through quantitative tightening, but there is more than ample supply of liquid assets in markets to meet Treasury demand. In the current quarter, the Treasury expects to borrow $852 billion . In the U.S., over $5.5 trillion is parked in the money market, and the global fixed-income market approaches $130 trillion. The current 10-year Treasury yield is toward the top end of that 150-year range.

It is perverse that the 10-year yield is rising as inflation falls fast toward the Federal Reserve’s 2% target, and talk of a recession is getting louder.

The economy is slowing because households need to rebuild savings. Credit card delinquencies are rising . For most households, excess Covid savings have been depleted . Mortgage rates near 8% will be a drag on the housing market and other interest-sensitive sectors. The resumption of student loan repayments, the end of Covid-related childcare benefits, and the effects of the labor dispute between the United Auto Workers and the Detroit auto manufacturers will also be drags on economic activity.

Importantly, as interest rates increase, financial conditions tighten, and the broader economy inevitably slows. Sometime next year, the Federal Reserve will almost certainly cut interest rates. When that happens, a powerful Treasury rally should unfold. The 10-year Treasury note looks extremely attractive. It looks like a no-brainer.

James Rogan is a former U.S. foreign service officer who later worked in finance and law for 30 years. He writes a daily note on finance and the economy, politics, sociology, and criminal justice.