US | Bond investors waiting for Fed help are waiting for Godot

The sharp rise in long-term Treasury bond yields has led to widespread
speculation that the Federal Reserve will intervene to tamp down long-term
rates. Yet, Fed policymakers have given no sign of an imminent shift absent a
disorderly and persistent tightening of financial conditions.

What you will learn:

  • While the rise in yields is impressive in isolation,
    it hasn’t been accompanied by a significant and broad-based
    tightening in financial conditions.
  • A look back at the wild swing in financial conditions early in
    the Covid crisis reveals the importance of resolute Fed
    intervention.
  • While the tightening of financial conditions was broad-based
    in 2018, three key elements likely prompted Fed
    intervention.

Topics: United States, Monetary policy, Federal Reserve, Coronavirus, Global financial flows, Financial risks, North America

Bond investors waiting for Fed help are waiting for Godot - iPad