TMV - The Fed Is Now Hamstrung Between Scylla And Charybdis

Introduction

For the last several years, I have described the Fed’s interest rate regimen as trying to steer a path between the Scylla of an inverted yield curve (if long rates stayed low) and the Charybdis of a downturn in housing (if long rates moved higher in tandem with low rates). Since I last looked at this in December, the Fed has changed its tone decisively, so let’s look at where we are now.

The good news: housing is poised to rebound

For most of last year, the Fed was bumping into Charybdis, as