"... the probability of an unwelcome substantial fall in inflation, though minor, exceeds that of a pickup in inflation from its already low level."That statement ignited a significant rally in the Treasury market, with the yield on the 10-year Treasury note falling about 40 basis points to 3.40%, a 45-year low. It also put the public's attention squarely on the risks of deflation, and the markets and the media have kept an intense eye on the deflation threat ever since.
Editor's note: This column, which reflects market activity from the day before, originally appeared May 20 on RealMoney.com. To sign up for RealMoney, where you can read Tony Crescenzi's commentary every day, please
click here for a free trial. When the Federal Reserve delivered its policy statement after the May 6 Federal Open Market Committee meeting, investors interpreted it as an indication that the Fed was expressing new deflation worries. After all, the Fed's choice of words seemed to suggest as much: