10YR Marches Higher
I’ve disagreed with everything the Fed has done since 2008, but especially since 2020. The massive covid QE stimulus program was a bad idea from the start, the weak QT effort was a joke, the BTFP bailout that subsidized all bank deposits was awful policy.
The Fed should set a reserve requirement above zero percent. The zero percent reserve requirement (set in 2020), is a primary reason why the money supply has exploded since 2020, and therefore why prices have skyrocketed as the Dollar’s value has eroded.
The Treasury market will eventually exercise discipline on Washington, which has lacked fiscal and monetary discipline for decades now. The 10YR yield will move higher and higher (maybe not on a straight line) as the Dollar’s value further erodes assuming the status que monetary and fiscal policy. I’m not sure what the magic number is, but when the 10YR hits 5 or 6%, economic activity will slow significantly. The Fed’s easing only pours fuel on the fire, which ought to be reflected in a higher 10YR yield.
We can’t return to the Gold Standard soon enough.