Treasury yields and market-based inflation expectations have taken a sharp turn higher in recent weeks. Is the shift a sign of regime change… or just noise? A convincing answer is on hold until sometime in 2017. Meantime, let’s review what we know so far.

Treasury yields have jumped over the past month, lifting the benchmark 10-year rate to its highest level in a year-and-a-half at one point last week, based on daily data via Treasury.gov. Although the yield ticked down on Monday (Dec. 5), dipping to 2.39%, it’s clear that sentiment has shifted in a meaningful degree.

The received wisdom is that last month’s election of Donald Trump convinced the crowd that a new wave of fiscal stimulus is coming in an effort to raise economic growth, boost employment, and generally fulfill the campaign promises to “make America great again.”

The economic updates since last month’s election have been strong enough to convince the market that the Federal Reserve remains on track to raise interest rates at next week’s FOMC meeting. Fed funds futures (based on CME data) are pricing in a roughly 95% probability that the current target range of 0.25%-to-0.50% will increase on Dec. 14.

The Treasury market’s inflation forecast has taken flight too. The yield spread for the nominal 10-year Note less its inflation-indexed counterpart this month has been trading just below the 2.0% mark, which marks the highest level since April 2015.

The attitude adjustment is no less conspicuous in Treasury yield spreads. The 10-year/3-month spread, for instance, has surged in recent weeks. After rising to 1.97% on Dec. 1, the spread eased to 1.90% yesterday. The question is whether this is a temporary respite before the spread climbs to 2%-plus levels in the weeks and months ahead?

There’s also been a marked change in the shape of the Treasury yield curve lately, particularly on the short end. Yields on the 1-month-through-3-year section of the curve are now trading at or close to the highest levels in more than five years.