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whereby markets were pricing in rate hikes as soon as Q4 2009 at one point (lol) because investors were operating on an outdated playbook.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.

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More from @TheStalwart

5 Jan
I think a lot of the discussions about Central Bank Digital Currencies or households having checking accounts at the Federal Reserve end up confusing political problems for technical ones.
We all know there's better ways to deliver counter-cyclical macro policy and that neither QE nor rate policy nor hoping for a good one-off stimulus bill are great ways to revive the economy after a downturn.
The question is, do political leaders want to establish standing facilities that get money to households in a downturn, or do they prefer the existing system, where recessions are opportunities to weaken labor, and elected officials retain the discretion to act or not.
Read 4 tweets
24 Dec 20
The new Odd Lots is out and it’s a Christmas gift to Bitcoin Twitter...

@tracyalloway and I finally had on @michael_saylor, the CEO of $MSTR, who over the course of 2020, turned his software company into an almost pure Bitcoin play…
We talked about

- what the heck is $MSTR
- How his employees feel about having their fate now tied to Bitcoin
- his view on the USD, Fed, and inflation statistics
- why people lent $MSTR money to buy Bitcoin
- What he’ll do if it hits $100k
On that last point, with the interview, @tracyalloway and I have secured I our invites to @michael_saylor’s yacht party
Read 4 tweets
22 Dec 20
XRP is kind of this weird faux crypto, very different than most of the rest. But I do think there's one important lesson it holds for the others, and that is what it says about the "store of value" vs "medium of exchange" debate that was prominent in the 2017 scaling wars...
Ripple likes to point out how fast it can be transferred, which is fine so far as it goes, but the ability to transact in some currency is only useful if that currency has some value to the end recipient of it.
You could, say, evade capital controls by sticking a bunch of napkins in a suitcase and calling them money. Border agents won't care. But nobody wants to accept the napkins that you're calling money.
Read 6 tweets
20 Dec 20
I block people rarely, but when I do it’s just because I find them extremely annoying and don’t want to think about them. I can’t imagine being this Rudy havenstein fellow who blocked me but still apparently tweets about me non stop. Why bother? Just go on and live your life Image
I’m just a normal guy who likes talking about markets, posting some shit, hanging out with my kids and listening to country music. And sometimes writing it too. So it’s weird to me how guys like Rudy, or @KeithMcCullough is another one, who think about me and get so mad.
Speaking of music, love Darius Rucker’s latest single…
Read 4 tweets
4 Nov 20
The prediction markets are great, they're just misunderstood. People get hung up on the "prediction" part. But that's not really what they're for. What they do is put a number on the current state of the conventional wisdom, which can be very useful.
If a prediction market gets it "wrong" it's just that people got it wrong. Which happens all the time. But to be able to go from something fuzzy (eg: "experts think Biden will win") to (eg "The market puts a 70% chance of Biden winning") is useful.
Then if you disagree, you have something substantive to benchmark your views against.
Read 5 tweets
4 Nov 20
NASDAQ 100 futures absolutely soaring.…
Now up 2.2%!
Now 2.5%!
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