TNA - Fed And Treasury Steer Their Unsinkable Ship Toward Iceberg

• This past week, we got to observe Fed Chair Jerome Powell and the US stock market and the US bond market do everything I said they would do in their complicated shuffle of ships-and-icebergs.
• While bond yields had already begun to rise and compete against stocks, the Fed stayed the course, iceberg dead ahead.
• One of the areas that Powell was completely silent about is a Fed restraint on banks called SLR, which controls how much of a bank's reserves can be held in treasuries.
• To support all the COVID stimulus last year, the Fed removed the restraint last April, but that moratorium on the restraint, is set to expire this month, and that is where the sell-off in treasuries resulted in falling prices for existing bonds.
• We might, indeed, see the end of the Everything Bubble. Behold the Titanic. Behold the iceberg.

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