The U.S. Just Passed $1.9 Trillion In Debt-Funded “Relief”. Now Is Not The Time For The Fed To Raise Rates. Yield Curve Control Is On The Horizon.
Some expect the Federal Reserve to become more hawkish in the near-term. We don’t see it. Not with $1.9 Trillion in new Government debt. The Fed will eventually ramp QE this year to push down the 10 year yield as it continues to climb. A Fed rate hike during a QE ramp is not going to happen. The Fed’s primary priority is to minimize debt service expense given our record debt levels. Inflation is the Fed’s friend at the moment as it reduces debt service expense. Thus, a QE ramp will be the Fed’s primary action in 2021. View the Treasury Yield curve HERE.