Four decades of history say it’s not over until the 2-year yield overshoots the EFFR. It has undershot for a year, and inflation is taking off again.
They don’t matter until they suddenly do.
Financial Conditions loosen further: credit markets blow off the Fed to make sure “higher for longer” gets entrenched? That would be funny.
Only 2% of credit card users are delinquent, according to new data from the New York Fed; 98% are current.
But now, the 10-year yield jumps 15 basis points from Friday. Short-covering has run its course?
Volatility. Powell mentioned it too. The 10-year yield is hugely volatile, and the drop over the past few days fits right in. Have a look.
The Spiking 10-Year Treasury Yields Apparently Rattled the Government’s Nerves.
Wolf Richter in an interview about these and other hot-button topics.
Yield fixes all demand problems. You just have to hit the right number, and the right number today was 5%.
Tsunami of issuance meets Fed QT, Skittish Foreign Buyers, and US buyers demanding to be compensated for the risks of out-of-control deficits in an inflationary environment.