Inflation Surge Whips Up Market Froth

Enthusiasm for riskier corners of the market has sent stock indexes and cryptocurrencies to record highs. A powerful driver, investors say, is surging inflation and the effect it has suppressing returns on safe government bonds, a main alternative to stocks.

Last week so-called real yields, which take into account the corrosive effects of inflation, hit some of their lowest levels on record. One measure of real yields, 10-year Treasury inflation-protected securities, fell to minus 1.2%, according to Tradeweb. That is the lowest on record, according to data going back to February 2003.