In this week’s Off The Cuff I sit down with Wolf Richter to discuss:
- The future implications of rising Treasury yields
- How long can the full-blown mania in the markets last?
- Why Wolf thinks the Fed’s hand will be forced to tighten by rising inflation
- San Francisco homelessness/crime boom a sign of things to come nationwide?
Treasury yields have been rising, with the 10-year just hitting its highest level in nearly a year. What does this signify?
Wolf Richter watches the bond market closely and thinks this is an early tell that the Fed may end up disappointing the markets eventually.
Like many of our recent guest experts, Wolf sees higher inflation ahead. And at some point, he sees the Fed — despite its recent stated willingness to let inflation “run hot” for a while — being forced to try to contain it.
Before it gets to the “unthinkable” stage of raising interest rates, it will use the other arrows in its quiver like slowing/stopping QE and eventually selling assets off of its balance sheet. So by allowing the long end of the Treasury curve to rise now, the Fed may be taking its first baby step towards ending its longstanding easing efforts.
Of course, if true, the ramifications of this are tremendous, as Wolf explains here:
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