Yields spiked past their March 2020 highs overnight. (This chart is inverted). Many believe this will be a sign of hyperinflation. To me, it is a sign that the FED has been amputated of its second last magic power (ie. moving to negative rates) and therefore they are losing control of the financial markets. If they want to keep this shenanigan going, they likely have one final weapon in their arsenal which is to buy up stocks *directly*. Such a move would have huge socio-economic and political ramifications. So, will they do it? Or will they finally let mother nature take its course and restore balance to this mangled beast we still call a stock market?
With respect to the question of hyperinflation, I agree that it will hit hard, but *only* the essentials of life: core inflation. In general, we will remain in a deflationary environment until all the bandages unravel one day and the whole system resets to heal itself from the bones out.
I think this move is more the aglos pushing it down, we could have a parabolic unwind. The Bond King on youtube talks about this.
supere
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@Boisetrader, OR the algos have switched directions finally and we are about to see epic collapse in all asset classes.
blueberrypunchz
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@Boisetrader, yes and jeff snider have good insight. WE have seen this before. JAPAN. Feds can't let rates go up, too much debt, Govt has to be able to spend forever and raising rates would crush their ability and FED is in Bed with Govt and who ever appointed them.
T-r-X
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So the Fed can't control the 10 yr yield with their purchases of treasuries?
supere
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@T-r-X, The FED typically controls only the lower end of the yield curve (ie. 1-3 months). If the higher ends of the spectrum (ei. 10/20/30yr yields) start to rise, then usually it will force their hands to follow. They may prove me wrong, but I think the higher end has too much supply/demand related strength to be controlled so easily. Also, if you look at *actual* yield data, you should see that the FED has always been following the general direction of the overall yields. It is just an illusion that they were really ever in total control.