In 2018 the markets threatened total collapse when Fed started to taper their quantitative easing, and rates started to rise. The 10 year got above 3% and all hell broke loose. The Fed promptly stepped in and started buying bonds in masse to support prices.
In 2021 with over twice the amount of government debt out, and more behind it, interest rates are nearing 2% as bond prices fall. Take a look at the chart on the left, it looks like a broken tech stock.
That is because even with hundreds of billions of buying each month by the Fed, issuance outpaces demand. When bond prices fall, yields rise.
The FED has made it clear that they will step in to support the bond market even more than it is doing right now. But, they will need market turmoil in order to have the cover to justify another trillion dollar plus Fed purchase.
This means the markets will have to fall hard for them to step in for the rescue. Probably a 10-20% drop. This should buy another 6-12 months before the next big drop.
In the mean time though, Biden will be seen as having a crash within his first 6 months of office. That will help put some of the Dem bullshit on hold. The real fun begins when we get the real crash either Q4 or early next year.
In 2018 the markets threatened total collapse when Fed started to taper their quantitative easing, and rates started to rise. The 10 year got above 3% and all hell broke loose. The Fed promptly stepped in and started buying bonds in masse to support prices.
In 2021 with over twice the amount of government debt out, and more behind it, interest rates are nearing 2% as bond prices fall. Take a look at the chart on the left, it looks like a broken tech stock.
That is because even with hundreds of billions of buying each month by the Fed, issuance outpaces demand. When bond prices fall, yields rise.
The FED has made it clear that they will step in to support the bond market even more than it is doing right now. But, they will need market turmoil in order to have the cover to justify another trillion dollar plus Fed purchase.
This means the markets will have to fall hard for them to step in for the rescue. Probably a 10-20% drop. This should buy another 6-12 months before the next big drop.
In the mean time though, Biden will be seen as having a crash within his first 6 months of office. That will help put some of the Dem bullshit on hold. The real fun begins when we get the real crash either Q4 or early next year.