Macro Tourist: The Simple Reason Yield Curve Control Isn’t Coming To The US

Macro Tourist: The Simple Reason Yield Curve Control Isn’t Coming To The US

Get the latest from The Macro Tourist in real-time on Twitter (@kevinmuir)  In a previous post I outlined various FALSE bond bear arguments that you should run away from. Today, I will try to refute a common narrative that I often hear from bond bulls: "The government will peg entire yield curve and even if you are right about increased inflation, you won't make any money on your short position because long rates will be 0%." Ok, I get it. The Japanese have pegged their curve. The ECB is man
Subscribe or log in to read the rest of this content.

5 thoughts on “Macro Tourist: The Simple Reason Yield Curve Control Isn’t Coming To The US

  1. Interesting. Yet as far as I am concerned #$&@ the crooked bank lobby and their perpetual training wheel socialize their risk candy asses.

  2. That’s adorable. How many slaves and indentured servants did it take to build this nation of freedom?

    And free markets. That is also cute. Government spending is 38% of G.D.P. in the United States. The Central Bank determines the cost of money. Defense industries and agriculture are heavily subsidized. Corporate welfare spending is well north of twelve figures annually. Large sectors of the economy are dominated by oligopolies, duopolies, and, often, monopolies. Labor unions and wage inflation are suppressed by law. Tariff policy, and their exemptions, are made by fiat by the Executive via social media.

    Price and wage controls happened within the living memory of many Americans. Some are old enough to remember a President confiscate gold by executive order. His successor ordered the Army to seize railroads before their workers could go on strike. There is nothing in the Constitutional history of our Republic to suggest that anything, literally anything, is beyond the power of a determined federal government and it is naive to suggest otherwise.

  3. I would be interested in more discussion of yield curve pegging, because I am late to the understanding party. My impression is that yield curve pegging is something that was done by the Treasury Dept during both World Wars, and mulled over by the Fed about a decade ago, and that it basically means buying whatever amount Treasury bonds to hold the yield down to the targeted level. This is different from QE which involved buying a targeted amount of Treasuries and not aiming for a particular yield.

    Would this work as well to raise yields as to lower yields? Suppose the US government wanted to raise 10y TSY from 1.50% to 2.50%, how many hundreds of billions of 10y TSY would the Fed have to sell, and if the Fed doesn’t have enough, would Treasury simply issue hundreds of billions more?

Speak your mind

This site uses Akismet to reduce spam. Learn how your comment data is processed.

NEWSROOM crewneck & prints