The 10-year treasury yield rocketed up to near 5%, and analysts say it’s because the economy is strong despite higher inflation. But if the economy is so strong, why are Americans so indebted, cash-poor, and desperate?
The recent spike in 10-year yields has been explained away by many as the result of a strong economy, but they fail to mention that high inflation makes the 10-year yield harder to contain.
High 10-year yields support higher rates for things like car loans and mortgages, and with the world still under the inflationary spell of COVID-era QE and free money “stimulus,” the only answer may be—you guessed it—more free money QE to “stimulate” an economy that’s already stuck in an infinite loop of inflation. As Peter Schiff said recently:
“I think that they’ve already lost control of the long end of the bond market…the Fed is going to be pressured to try to lower long-term rates, and the only way it would be able to do that is by buying the long term bonds, and the only way to get the money to do that is to print it.”
But not even the Fed has a clue for how it would deal with a stagnation scenario.
“It was almost humorous and even it got a laugh out of Powell. A reporter asked him at the last press conference, ‘What’s your plan for stagflation?’ And he laughed and says, ‘Our plan for stagnation is that we’re not going to have it.’”
But we already do. For now. markets are also still trying to figure out how to react to Trump’s win, and uncertainty breeds volatility. So, high inflation coupled with uncertainty and “strong” economic data are the three factors being attributed to the spike in yields. The inflation part is partially right; the only problem is that it doesn’t go far enough, because inflation is actually much worse than what’s being reported. The other problem is that the “strong jobs data” being partially blamed for the rise in yields is never really as strong as what gets reported, as the jobs reports and other economic data are unreliable and designed to paint as rosy a picture as possible.
As Treasury yields keep rising...(READ THIS FULL ARTICLE FREE HERE).
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