the Fed sets overnight rates, often in response to what investors are communicating via the pricing of the 2-year. The 5-year does what it wants. The 10-year is the main boss at the end of the level and the Fed cannot defeat it.
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This is why you don't want the Fed, or any central bank to lose it's independence. It could lower the overnight rate, but if the bond market thinks doing so will be inflationary, rates could go the opposite direction that was intended.
jul 14, 2025, 3:17 pm • 0 0 • view
Always stunned at how few people understand this-including the idiot in the WH. It's also worth mentioning that the Bond market is much BIGGER and much SMARTER than the equity market. Bond vigilantes can sniff out trouble LONG before the equity market.
jul 14, 2025, 7:52 pm • 2 0 • view