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What Is The Fed Playing At?

By Andrew LaneStock MarketsMar 05, 2021 06:16AM ET
www.investing.com/analysis/what-is-the-fed-playing-at-200565215
What Is The Fed Playing At?
By Andrew Lane   |  Mar 05, 2021 06:16AM ET
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Yesterday all eyes were on Jerome Powell’s speech with the majority expecting him to raise concerns about the rising yields and inflation. Unless you’ve been asleep the last few weeks, you’ll have noticed that the S&P 500 and mainly the tech heavy NASDAQ have posted weekly losses. Heavy in the case of the latter.
 
With traders waiting for “Yield curve control” to be uttered in his next sentence, or “Yes I am majorly concerned about bonds” and “We can’t afford interests rates to rise” instead it was the most laissez faire of speeches we could have imagined. In actual fact he may have made the problem even worse.
 
The rising yields and tanking bonds should be a massive red flag to the Fed. With the soaring debt levels, The US can’t cover interest payments let alone repayment of this soon to be $30 trillion debt. To anyone else this is called insolvency but he didn’t seem to be worried at all. In fact brushed off the inflation fears as just a short term blip with no long term effect. Shortly after his blasé speech the dollar smashed higher following yields and the markets tanked.  No real surprises there as this was not what was expected.
 
Australia recently bought a load of bonds, presumably in anticipation for a top in yields. They have already implemented yield curve control over there with a maximum rated interest rate. This has provided some stability in the markets. So what is the Fed playing at? Why are they leaving it to go out of control and work against them? That is what the Fed is there for isn’t it to control these problems?
 
Does the Fed have a massive short position in gold? Who knows, but what we do know is that they cannot continue at the levels that are taking place. Soon they will have to implement yield curve control, and maybe even negative rates. The UK and the US remain only the few in the western world that have not implemented this yet. The UK have already dropped a massive hint this is coming later in the year, and have prevaricated each time the question has been asked.
 
Negative rates and yield curve control will lead to inflation, but be under no illusion the Fed wants and needs inflation. From the moment in late March the printing machines commenced they knew this was happening and they have no choice. What other ways can a country service such huge debt? High tax, and create the environment for inflation. Bear market in stocks coming?
 
Gold gold anyone?  

What Is The Fed Playing At?
 

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What Is The Fed Playing At?

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Comments (2)
Mehdi Captain Music
Mehdi Captain Music Mar 05, 2021 1:46PM ET
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Gold’s bubble is exploded. It continues the correction between $1600 - $1400.
david rosenblum
david rosenblum Mar 05, 2021 12:24PM ET
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People actually get paid for such articles?
Mehdi Captain Music
Mehdi Captain Music Mar 05, 2021 12:24PM ET
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Even Biden has empty articles.
 
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