EGRNF - Powell's Words Imply 'Short Treasuries'

• Fed Chair Powell indicated in his FOMC press conference last Wednesday that he wants the Fed to be out of the QE business by mid-year 2022. That implies a rate of tapering of bond purchases by $15-20 billion per month from the present rate of $120 billion per month.
• Powell’s message helped the Treasury market clear the 1.38% resistance level on the 10-year yield, which sold off aggressively into Friday.
• This aggressive tapering is likely to push Treasury yields above 2% by the end of 2021, provided everything is fine with the pandemic winding down and containment of the domino effects of the Evergrande implosion in China.
• Perhaps the realization that inflation may not be as transitory as Powell had previously suggested is reflected in the FOMC desire to end QE as fast as possible in the least disruptive manner possible.

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