Wassup? Big guys got their balls stuck in the vise and Mr.Market going full strength righty tighty on the 30Y lol So much for inflation sky's falling...
Mr.Market these days goes by the name The Fed. Let's see what happens once mid next year gets here and no more bond purchases. I wouldn't be surprised if we don't see some sort of an extension of that instead.
Infrastructure bill came way below expectations. But, the inflation story stays the same. Today could be the best bond short since last November.
I am wondering how Fed can suppress long term interest rate after QE stops. Fed fund rate is short term rate which can influence but not determine long term rate. Will bond crash once QE stops?
It's a fine balance. I am actually sweating an flattening/inversion which is how things look headed right now. I don't believe it though. We were sweating the slow down prior to earnings. I have a hard time believing a catastrophic US bond crash. Everybody wants it. The better the yields, the more they buy. The world is awash in money.
I don't think Fed can afford a high interest rate to fight inflation. They can raise bank reserve requirement to reduce money supply. Recession is inevitable when money supply shrinks.