Posted To: MBS Commentary
There seems to be a fair amount of surprise and confusion surrounding today’s bond market sell-off in response to Fed Chair Powell’s Q&A with the WSJ. First off, this wasn’t a Q&A so much as a PSA to address some fairly far-fetched assumptions about how the Fed might react to the recent spike in bond yields. It’s a sad state of affairs that such an exercise was even necessary considering just how transparent and unified the Fed has been in their message. What message is that? Here are a few of the key points laid out by multiple Fed speakers recently: Rising long-term bond yields are not yet troubling. They reflect economic optimism and rising inflation expectations. This is what should be happening at this stage in the recovery The Fed discussed extending the duration…(read more)
