Don’t act surprised that yields are moving higher. Inflation is not being tamed. Real rates are rising alongside stronger economic growth. The term premium is rising because of risk and bonds' lower diversification value. And we haven’t even mentioned the huge increase in Treasury supply that the Fed isn’t buying.
What would you expect to happen? Nevertheless, this shall pass. Rates are not going back to the days of financial repression and the Fed flooding the market with liquidity. Bonds will reflect the underlying drivers of yield, and if those are controlled, yields will moderate.
No comments:
Post a Comment