Federal Reserve will not be a happy guy looking at the yields lately after the big overnight dump on US treasury notes. Most of his team talking about the green shoots recovery blah blah and those shoots came by printing money.Okay now lets looks at US treasury and Yields:
US Treasury and yields are inversely proportion to each other. Let me take an example of 10 Year US treasury and corresponding yields chart here. Click imagine for sharper view (Yields @ 3.5% odd)
Fed can buy US Treasury to bring the yields down which he did but when the bond guru like pimpco CEO says that US treasury is not a safe bet in longer run then people has to think about it and we had the overnight dump.Now what happens when people get out of the treasuries, Yields goes up and what does that imply, interest rates going up which intern suggests that inflation is around the horizon but where is fed interest @ now 0% which will scream to death if he does not have total control on yields.Right now yields are around 3.5% odd and fed quantitative easing is around 0% to make banks profitable again which will not only make things worse but also abolish fed in near future as it not a good sign for Federal Reserve. Click imagine for sharper view ( Safe Heaven getting dumped and Fed Reserve's snow ball)
I think Fed is already stress out having pain mediation overnight after looking at the yields, And may be he is out of the silver bullets if he does not do anything in coming months as US will also lose the AAA rating which looks more likely in near term, And looks more like twin to UK to me which lost its AAA rating (ha ha its too big to fail myth). Anyway, Gold is reacting strongly and markets on thier toes if people started dumping dollars to get out of US.
