As I've outlined before, wages tend to be the one of the better predictors of inflation (or deflation) out there as wages tend to be very sticky and stable (so when they move, it tends to mean there is a new underlying trend).
So how are wages currently holding up?
Well, earlier this week, the BLS released compensation figures for Q1 and even with negative real interest rates and multiple quantitative easings, there is absolutely no wage inflation in the pipeline. In fact, the year-over-year change in nominal wages came in at just 1.3% at the end of March and 0% over the last six months, the lowest since the crisis and below the rate of inflation.
Even more concerning (to me) is that these figures are as of March, before business sentiment took a turn for the worse on renewed European concerns.
With no inflationary pressure and limited growth potential, a low yielding Treasury bond almost appears justified.