Something to remember is that the objective of Fed policy here is not to keep yields low. The objective is to keep yields lower than they otherwise would have been, given the same set of macro and market conditions had they existed under a different policy regime.
That may seem like a minor distinction, but I don't think it is. Rising rates don't undermine the agenda per se. What's problematic is if rates rise in such a way that suggests the market is anticipating policy hikes sooner than what the Fed has outlined is appropriate.
There was an egregious mismatch coming out of the Great Financial Crisis, whereby markets were pricing in rate hikes as soon as Q4 2009 at one point (lol) because investors were operating on an outdated playbook.
All those QE programs (operation twists, Evan's Rule) were about signaling to the market to settle in for the long haul on ZIRP.
The Fed has gotten a lot better at communication since then (learned how to use its tools, bult up credibility) and has an easier job this time round.
The Fed has gotten a lot better at communication since then (learned how to use its tools, bult up credibility) and has an easier job this time round.
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