- The bond market is pushing long rates up for the Fed while its balance sheet is growing at $120 billion per month.
- Because the Fed does not want to do any tightening, even though it expects to see an uptick in inflation because of the pending reopening of the economy, I think the present rise in Treasury yields is welcomed by the Fed.
- The question is how high inflation will go and if real interest rates (after inflation) will decline further. I do not believe real interest rates will rise significantly from here, and they are likely to remain negative for some time, likely kept there by the Federal Reserve.
For further details see:
How Fast Will The 10-Year Treasury Yield Get To 2%?