LONDON - Federal Reserve: 1, bond markets: 0. That’s more or less where it stands after Round One in the tussle over borrowing costs. But Round Two, and perhaps even Round Three, are inevitable, and they may require policy action rather than just words.
In theory, that would force the Fed’s hand in raising interest rates, wiping out investors’ bond market returns. Markets facing off against central banks is nothing new and the old adage “Don’t fight the Fed” still holds. But market clout has grown too. “This was probably one of the first market tantrums,” Ahmed said. “If it happens again and again, the Fed will have to go for YCC.”What happens in sovereign bond markets matters because higher yields here raise borrowing costs for companies and households. As capital flow slows, so does economic growth.
Fed must see what is possible with ElrondNetwork