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Data: U.S. Department of the Treasury; Chart: Michelle McGhee/Axios

Bond investors are looking past last week's tepid consumer price index report that showed U.S. inflation rising at just 1.4% and continue selling out of Treasury bonds in a big way, pushing yields from the benchmark 10-year note to their highest since mid-March on Friday.

Why it matters: Even at their still historically low levels, the market's rising inflation expectations are beginning to have an impact on the real economy by pushing mortgage, credit card and auto loan rates higher, making them more expensive for consumers.

Where it stands: Mortgage rates increased in four of the first six weeks of 2021, data from the Mortgage Bankers Association showed last week.

  • “With the 30-year fixed rate increasing to 2.96 percent — a high not seen since last November — refinances declined, and their share of total applications dipped to the lowest level in three months," Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement.
  • Credit card balances and other revolving credit lines ticked down 0.3% month over month in December and fell by 10.8% year over year, the steepest decline ever, according to the Federal Reserve.

The big picture: With the notable exception of mortgages and student loans, Americans consistently reduced and took on less debt as 2020 progressed.

  • Banks also tightened lending standards and cut back lending, with the loan books at large U.S. banks shrinking for the first time in more than a decade and just the second time in 28 years, according to Barclays data.

State of play: Both student loan and mortgage rates fell to their cheapest level ever in 2020 but those trends are beginning to reverse as investors price in higher inflation expectations and push bond yields higher.

  • Ten-year breakeven inflation expectations rose to 2.23% on Friday, the highest since 2014, meaning investors are now pricing in average annual inflation of 2.23% for the next 10 years.

Between the lines: As Treasury yields (considered the world's safest asset) are spiking and inflation expectations are hitting their highest levels in years, yields on high yield, or junk bonds, have fallen to the lowest in history.

Go deeper

1 hour ago - Health

Biden says it's "not the time to relax" after touring vaccination site

President Biden speaking after visiting a FEMA Covid-19 vaccination facility in Houston on Feb. 26. Photo: Mandel Ngan/AFP via Getty Images

President Biden said Friday that "it's not the time to relax" coronavirus mitigation efforts and warned that the number of cases and hospitalizations could rise again as new variants of the virus emerge.

Why it matters: Biden, who made the remarks after touring a vaccination site in Houston, echoed CDC director Rochelle Walensky, who said earlier on Friday that while the U.S. has seen a recent drop in cases and hospitalizations, "these declines follow the highest peak we have experienced in the pandemic."

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Annelise Capossela/Axios

  1. Health: Most COVID-19 survivors can weather risk of reinfection, study says — "Twindemic" averted as flu reports plummet amid coronavirus crisis
  2. Vaccine: FDA advisory panel endorses J&J COVID vaccine for emergency use — About 20% of U.S. adults have received first vaccine dose, White House says — New data reignites the debate over coronavirus vaccine strategy.
  3. Economy: What's really going on with the labor market.
  4. Local: All adult Minnesotans will likely be eligible for COVID-19 vaccine by summer — Another wealthy Florida community receives special access to COVID-19 vaccine.
  5. Sports: Poll weighs impact of athlete vaccination.

The week markets went wild

Illustration: Lazaro Gamio

The markets just closed out a manic week.

Why it matters: Outsized — and in some cases historic — moves were evident across the board.