Employment Cost is on the Rise, Yields finally Reacting

Today's US employment cost index showed a significant gain for Q1 of 2015, at 2.6% YoY.   Labor markets are getting tighter and we are seeing this show up in wage inflation.  Better late than never. In addition, US yield curves are finally reacting to this trend.  Still, 10 year yields look rich vs the risk of higher inflation driven by wage gains.