A recent rise in US Treasury yields is partly reflecting growing investor expectations that a little-known measure of the economy's neutral interest rate, known as R-star, may be moving higher, according to a report by Reuters.
R-star refers to the theoretical interest rate that neither stimulates nor restrains economic activity when the economy is operating at full potential. Some analysts believe it could be higher than recent estimates suggest as the US economy absorbs a powerful combination of artificial intelligence-related investment and heavy government borrowing.
