Topics Topics Help/Instructions Help Edit Profile Profile Member List Register Paatha Gnyapakaalu - Archives from Old DB  
Search New Posts 1 | 2 | 8 Hours Search New Posts 1 | 3 | 7 Days Search Search Tree View Tree View Latest tweets Live Tweets   Hide Images

Rate this post by selecting a number. 1 is the worst and 5 is the best.

    (Worst)    1    2    3    4    5     (Best)

Author Message
Top of pagePrevious messageNext messageBottom of page Link to this message

Entrepreneur
Kurra Bewarse
Username: Entrepreneur

Post Number: 3947
Registered: 05-2011
Posted From: 24.164.46.35

Rating: N/A
Votes: 0

Posted on Thursday, January 20, 2022 - 2:28 pm:   

can the Fed get inflation down when bond yields are falling"

I have seen a couple questions like this in feedback over recent days. I think it is asking the question: "If the yield on the 10-yr T-note tops out because of [reason, like maybe foreign rate spreads] and starts to go back down, but the Fed has said it needs to raise rates to stop inflation, then isn't there a big problem?"

In reality, when the Fed talks about rates, it isn't talking about the yield on the 10-yr T-note. It's talking about the fed funds rate and borrowing rates at the short end of the yield curve. The Fed controls the short end of the curve (just look at the 13-week T-bill chart over the last three weeks). The market controls the long end of the curve.

If the Fed raises rates at the short end and rates go down slightly at the long end in response, that would actually be a vote of confidence from the market in the Fed's ability to get inflation under control through its tightening process -- inflation is one of the most important drivers of higher rates at the long end of the curve.

Topics | Last Hour | Last Day | Last Week | Tree View | Search | Help/Instructions | Program Credits Administration